In: Accounting
Diane’s Designs is a small business run out of its owner’s house. For the past 6 months, the company has been selling two products, a welcome sign and a birdhouse. The owner has been concerned about the company’s marketing effectiveness. The master budget and actual results for March of this year follow:
Master Budget | |||||||||||
Welcome Sign | Birdhouse | Total | |||||||||
Units | 170 | 140 | 310 | ||||||||
Sales | $ | 3,400 | $ | 1,400 | $ | 4,800 | |||||
Variable costs | 2,720 | 630 | 3,350 | ||||||||
Contribution margin | $ | 680 | $ | 770 | $ | 1,450 | |||||
Fixed costs | 75 | 75 | 150 | ||||||||
Operating income | $ | 605 | $ | 695 | $ | 1,300 | |||||
Actual Results | |||||||||||
Welcome Sign | Birdhouse | Total | |||||||||
Units | 160 | 150 | 310 | ||||||||
Sales | $ | 2,400 | $ | 1,800 | $ | 4,200 | |||||
Variable costs | 735 | 363 | 1,097 | ||||||||
Contribution margin | $ | 1,665 | $ | 1,437 | $ | 3,103 | |||||
Fixed costs | 75 | 75 | 150 | ||||||||
Operating income | $ | 1,590 | $ | 1,362 | $ | 2,953 | |||||
The total market for welcome signs for each of the last 6 months was 500 budgeted and 500 actual. Diane expected the total market for birdhouses to be 1,120 units per month; the actual volume for the entire market, however, turned out to be only 750 units per month.
Required:
1. Compute Diane’s actual market share for welcome signs and birdhouses.
2. What is the market share contribution margin variance? (Leave no cell blank; if there is no effect enter "0" and select "None" from dropdown. Do not round intermediate calculations. Round your answers to 2 decimal places.)
3. What is the market size contribution margin variance? (Leave no cell blank; if there is no effect enter "0" and select "None" from dropdown. Do not round intermediate calculations. Round your answers to 2 decimal places..)