Houston Infonautics' senior vice president of marketing prepared his budget at the beginning of the third quarter
Question:
Houston Infonautics' senior vice president of marketing prepared his budget at the beginning of the third quarter assuming a 25% market share based on total sales. Foolinstead Research estimated that the total handheld-organizer market would reach sales of 444.000 units worldwide in the third quarter. However, actual sales in the third quarter were 500:000 units.
1. Calculate the market-share and market-size variances for Houston Infonautics in the third quarter of 2014 (calculate all variances in terms of contribution margins).
2. Explain what happened based on the market-share and market-size variances.
3. Calculate the actual market size, in units, that would have led to no market-size variance (again using budgeted contribution margin per unit). Use this market-size figure to calculate the actual market share that would have led to a zero market-share variance.
Variance analysis, sales-mix and sales quantity variances. Houston Infonautics, Inc., prod handheld Windows CE TM -compatible organizers. Houston Infonautics markets three different hanc models: PaImPro is a souped-up version for the executive on the go, PalmCE is a consumer-oriented ver and PalmKid is a stripped-down version for the young adult market. You are Houston Infonautics' st vice president of marketing. The CEO has discovered that the total contribution margin came in lower budgeted, and it is your responsibility to explain to him why actual results are different from the Budgeted and actual operating data for the company's third quarter of 2014 are as follows:
Budgeted Operating Data, Third Quarter 2014
Actual Operating Data, Third Quarter 2014
1. Compute the actual and budgeted contribution margins in dollars for each product and in total for the third quarter of 2014.
2. Calculate the actual and budgeted sales mixes for the three products for the third quarter of 2014.
3. Calculate total sales-volume, sales-mix, and sales-quantity variances for the third quarter of 2014. (Calculate all variances in terms of contribution margins.)
4. Given that your CEO is known to have temper tantrums, you want to be well prepared for this meeting. In order to prepare, write a paragraph or two comparing actual results to budgeted amounts.
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan