Problem 17-42 Revenue Analysis Using Industry Data and Multiple Product Lines (LO 17-3)

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					$	480					$	880					$	1,560
Variable costs			140						400						740						1,280
Contribution margin		$	60					$	80					$	140					$	280
Manufacturing fixed cost			36						34						56						126
Product margin		$	24					$	46					$	84					$	154
Marketing and administrative costs (all fixed)																					57
Operating profit																				$	97
Actual
Sales-units (in thousands)	1,600 bars						2,000 bars						4,200 bars						7,800 bars
Sales-dollars (in thousands)		$	112					$	480					$	880					$	1,472
Variable costs			70						424						716						1,210
Contribution margin		$	42					$	56					$	164					$	262
Manufacturing fixed cost			40						40						58						138
Product margin		$	2					$	16					$	106					$	124
Marketing and administrative costs (all fixed)																					13
Operating profit																				$	111

Industry volume was estimated at 87.0 million bars for budgeting purposes. Actual industry volume for July was 79.2 million bars.

Required:

a. Determine the sales price and sales activity variances. (Do not round intermediate calculations. Enter your answers in thousands. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Sales price variance

Sales activity variance

b. Break down the sales activity variance into the parts caused by industry volume and market share. (Do not round intermediate calculations. Enter your answers in thousands rounded to 1 decimal place. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Market share variance

Industry variance