Question

In: Accounting

Contribution Margin Variance, Contribution Margin Volume Variance, Market Share Variance, Market Size Variance Sulert, Inc., produces...

  1. Contribution Margin Variance, Contribution Margin Volume Variance, Market Share Variance, Market Size Variance

    Sulert, Inc., produces and sells gel-filled ice packs. Sulert’s performance report for April follows:

    Actual Budgeted
    Units sold 290,000 300,000
    Sales $1,450,000 $1,515,000
    Variable costs 652,500 636,300
      Contribution margin $ 797,500 $ 878,700
    Market size (in units) 1,250,000 1,200,000

    Required:

    1. Calculate the contribution margin variance and the contribution margin volume variance. In your computations, round the contribution margin per unit to three decimal places.

    Contribution margin variance $
    Contribution margin volume variance $

    2. Calculate the market share variance and the market size variance. In your computations, round the unit contribution margin to three decimal places and round the market share percentage to one decimal place (for example, .8439 would be rounded to 84.4%). Round your final answers to the nearest dollar. (CMA adapted)

    Market share variance $
    Market size variance $

Solutions

Expert Solution

1
CM Variance = (Actual CM Per Unit – Budgeted CM Per Unit) × Actual Sales ((797500/290000)-(878700/300000))*290000 -$51,910
Contribution margin volume variance
Contribution margin volume variance = (Actual quantity sold – Budgeted quantity sold) × Budgeted average unit contribution margin (290000-300000)*(878700/300000) -$29,290
2 Market share variance
(Actual market share % - Budgeted market share %) x Total market in units x Average Budgeted Contribution perunit ((290000/1250000)-(300000/1200000))*1250000*(878700/300000)) -$65,903
Market size variance
Budgeted market share % x (Actual industry sales quantity in units - budgeted industry sales quantity in units)*(average budgeted contribution per unit) ((300000/1200000)*(1250000-1200000)*(878700/300000)) $36,613

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