Question:
The Payne Company manufactures two types of vinyl flooring. Budgeted and actual operating data for 2012 are as follows:
|
Static Budget
|
Actual Results
|
|
Commercial
|
Residential
|
Total
|
Commercial
|
Residential
|
Total
|
|
Unit sales in rolls
|
20,000
|
60,000
|
80,000
|
25,200
|
58,800
|
84,000
|
|
Contribution margin
|
$10,000,000
|
$24,000,000
|
$34,000,000
|
$11,970,000
|
$24,696,000
|
$36,666,000
|
In late 2011, a marketing research firm estimated industry volume for commercial and residential vinyl flooring for 2012 at 800,000 rolls. Actual industry volume for 2012 was 700,000 rolls.
1. Compute the sales-mix variance and the sales-quantity variance by type of vinylflooring and in total. (Compute all variances in terms of contribution margins.)
2. Compute the market-share variance and the market-size variance.
3. What insights do the variances calculated in requirements 1 and 2 provide about Payne Company's performance in 2012?