Valet Co is a car valeting (cleaning) company. It operates in the country of Strappia, which has
Question:
Valet Co is a car valeting (cleaning) company. It operates in the country of Strappia, which has been badly affected by the global financial crisis. Petrol and food prices have increased substantially in the last year and the average disposable household income has decreased by 30 percent. Recent studies have shown that the average car owner keeps their car for five years before replacing it, rather than three years as was previously the case. Figures over recent years also show that car sales in Strappia are declining whilst business for car repairs is on the increase.Valet Co offers two types of valet ? a full valet and a mini valet. A full valet is an extensive clean of the vehicle, inside and out; a mini valet is a more basic clean of the vehicle. Until recently, four similar businesses operated in Valet Co?s local area, but one of these closed down three months ago after a serious fire on its premises. Valet Co charges customers $50 for each full valet and $30 for each mini valet and this price never changes. Their budget and actual figures for the last year were as follows:
he budgeted contribution to sales ratios for the two types of valet are 44.6 percent for full valets and 55 percent for mini valets.
Required:(a) Using the data provided for full valets and mini valets, calculate:(i) The total sales mix contribution variance;(ii) The total sales quantity contribution variance.(b) Briefly describe the sales mix contribution variance and the sales quantity contribution variance.(c) Discuss the SALES performance of the business for the period, taking into account your calculations from part (a) AND the information provided in the scenario.
Step by Step Answer:
a i Total sales mix contribution variance The budgeted contribution per unit for full valets 50 x 446 2230 The budgeted contribution per unit for mini ...View the full answer
