Peninsula Candy Company makes three types of candy bars: Chewy, Chunky, and Choco-Lite (Lite). Sales volume for the annual budget is determined by estimating the total market volume for candy bars and then applying the company's prior year market share, adjusted for planned changes due to company programs for the coming year. Volume is apportioned among the three bars based on the prior year's product mix, again adjusted for planned changes for the coming year.

The following are the company budget and the results of operations for July.

Budget Chewy Chunky Choco-Lite Total

Sales-units (in thousands) 2,000 bars 2,000 bars 4,000 bars 8,000 bars

Sales-dollars (in thousands)$200 $360 $640 $1,200

Variable costs 140 300 480 920

Contribution margin $60 $60 $160 $280

Manufacturing fixed cost 42 30 60 132

Product margin $18 $30 $100 $148

Marketing and administrative costs (all fixed) 55

Operating profit $93

Actual Chewy Chunky Choco-Lite Total

Sales-units (in thousands) 1,500 bars 2,000 bars 4,100 bars 7,600 bars

Sales-dollars (in thousands)$105 $360 $640 $1,105

Variable costs 67 300 517 884

Contribution margin $38 $60 $123 $221

Manufacturing fixed cost 35 36 58 129

Product margin $3 $24 $65 $92

Marketing and administrative costs (all fixed) 41

Operating profit $51

Industry volume was estimated at 83.5 million bars for budgeting purposes. Actual industry volume for July was 76.820 million bars.

Required:

a.Determine the sales price and sales activity variances.

b.Break down the sales activity variance into the parts caused by industry volume and market share.