Folsom Fashions sells a line of women's dresses. Folsom's performance report for November 2010 is shown below. The company uses a flexible budget to analyze its performance and measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating results.

a. Compute the sales price variance and the sales volume variance for November 2010.
b. Determine the impact of the sales volume variance on Folsom's contribution margin for the month of November 2010.
c. What additional information is needed for Folsom to calculate the dollar impact of a change in the market share on operating income for November 2010? What would be the overall benefit to Folsom's sales managers of having such information?
d. Explain why performance evaluation at Folsom Fashions is limited if the company's evaluation of management is based solely on sales price and volumevariances.

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Budget 6,000 $300,000 (4500 (180000) Contribution margin 90,000 $120,000 40080000) Actual Dresses sold Sales Variable costs 5,000 235000 $300000 Fixed costs rating income600o $40,000