Juan Louis manages the sales department at the Boulder Lighting Company. Juan is evaluated based on his ability to meet budgeted revenues. For June 2001, Juan’s revenue budget was as follows:
|
Price per Unit |
Unit Sales |
|
|
Floor lamps |
$120 |
1,600 |
|
Hanging lamps |
65 |
2,150 |
|
Ceiling fixtures |
80 |
4,200 |
The actual sales generated by Mr. Louis’s sales department in June were as follows:
|
Total Sales |
||
|
Price per Unit |
in Dollars |
|
|
Floor lamps |
$115 |
$195,500 |
|
Hanging lamps |
70 |
141,400 |
|
Ceiling fixtures |
75 |
311,250 |
a. Compute the revenue price variance.
b. Compute the revenue mix variance.
c. Compute the revenue volume variance.
d. Based on your answers to parts (a) through (c), evaluate the performance of Mr. Louis.
e. If Mr. Louis is to be held accountable for meeting the revenue budget, why might it be advisable to also give him the authority to set the sales person salary and commission structure?