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?