Reference no: EM133112173
Question - Arrow Plastics Inc. produces 3 different sizes of wheeled shopping carts: models RC360, RC240, and RC120. The CEO discovered that the actual total contribution margin is lower than what was budgeted, and he wants you to provide an analysis explaining why actual results are different from budgeted data. Budgeted and actual operating data for 2015 are as follows:
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ARROW PLASTICS INC. Budgeted Operating Data For the year ended 2015
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Selling Price per Unit
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Var Costs per Unit
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Contribution Margin per Unit
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Sales Volume in Units
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RC360
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$94
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$50
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$44
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13,750
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RC240
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68
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44
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24
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41,250
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RC120
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38
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22
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16
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55,000
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110,000
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Actual Operating Data For the year ended 2015
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RC360
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87
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$44
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$43
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12,500
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RC240
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71
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50
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21
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50,000
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RC120
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36
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17
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19
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62,500
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125,000
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The 2015 budget was prepared under the assumptions that Arrow Plastics would have a 25% share of the market and that national sales for the Canadian market would reach 440,000 units. However, actual national sales were 520,000 units.
Required -
1. Calculate the static budget variance.
2. Calculate the flexible budget variance and sales volume variance.
3. Compute the actual and budgeted contribution margins (CM) in dollars and in percentage of total budgeted contribution in dollars.
4. Calculate the sales mix variance for the 3 products.
5. Calculate the market-share variance.
6. Calculate the market-size variance.