Dianes Designs is a small business run out of its owners house. For the past six months,

Diane’s Designs is a small business run out of its owner’s house. For the past six 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	50	25	75
Sales	$1,000	$250	$1,250
Variable costs	890	120	1,010
Contribution margin	$110	$130	$240
Fixed costs	75	75	150
Operating income	$35	$55	$90
		Actual Results
	Welcome Signs	Birdhouses	Total
Units	45	35	80
Sales	$675	$420	$1,095
Variable costs	580	270	850
Contribution margin	$95	$150	$245
Fixed costs	75	75	150
Operating income	$20	$75	$95

The total market for welcome signs for the last six months are 3,000 budgeted and 3,000 actual. Diane expected the total market for birdhouses to be 200 units per month; the actual volume for the entire market, however, turned out to be only 175 units per month.

Required
(Rounding differences are acceptable)
1. Compare Diane’s Designs’ market share for welcome signs and birdhouses.
2. What is the market share contribution margin variance?
3. What is the market size contribution margin variance?
4. Explain possible reasons for thesevariances.

Transcribed Image Text:

The total market for welcome signs for the last six months are 3,000 budgeted and 3,000 actual. Diane expected the total market for birdhouses to be 200 units per month; the actual volume for the entire m arket, however, turned out to be only 175 units per month Required 1. Compare Diane's Designs' market share for welcome signs and bir dhouses 2. What is the market share contribution margin variance? 3. What is the market size contributi on margin variance? 4. Explain possible reasons for these variances