BAO 1101 Quiz: Week 7 Quiz - (BAO1101) Accounting For Decision Making Attempt 3

The Greensboro Performing Arts Center (GPAC) has a totalcapacity of 7,600 seats: 2,000 center seats, 2,500 side seats, and3,100 balcony seats. The budgeted and actual tickets sold for aBroadway musical show are as follows:

Percentage Occupied

The actual ticket prices are the same as those budgeted. Once ashow has been booked, the total cost does not vary with the totalattendance.

Compute the following for the show:

The budgeted and actual sales mix percentages for differenttypes of seats. (Round your answers to 4 decimal places.(i.e. .123456 = 12.3456%))

Use with Excel

The TV Corporation manufactures 2 types of TVs. The Basic TV

and the Deluxe TV. Budgeted and actual annual operating data areas follows:

Static Budget

Basic

Deluxe

Total

Number units Sold

60,000

40,000

100,000

Total Contribution Margin

$3,480,000

$3,444,000

$6,924,000

Budgeted CM per unit

$58.00

$86.10

Actual Results

Number units sold

59,850

45,150

105,000

Total Contribution Margin

$3,650,850

$3,612,000

$7,262,850

But, the actual industry volume was

300,000

Units

Prior to the beginning of the year, a consulting firm estimatedthe total volume

for volume of the Basic and Deluxe industry category to be

310,000

Units

Required:

Calculate the following information and variances on theworksheet entitled analysis. I have tried to give some helpfulhints.

Use the contribution margin approach in the following salesvariance analysis that follows.

a. Calculate the Static-budget variance.

I have tried to set up a model to use on the analysisworksheet.

Look at Exhibit 14-11 p.571

b. Calculate the contribution margin for the flexiblebudget.

c. Calculate the flexible budget variance.

d. Calculate the sales-volume variance.

e. Compute the actual sales-mix

f. Compute the budgeted sales-mix

g . Compute the sales-mix variance for each product andthen the total sales-mix variance like the table shown onpage 572. I have set up the table for you to fill in.

h. Compute the sales-quantity variance by type of machine andtotal

if total actual quantity is greater than total budgeted unitsthe sales-quantity will always be F and the opposite will occurwhen actual is less than budgeted).

i. Compute the market-share variance

j. Compute the market-size variance.

4

k. Comment on the results of the above variance analysis. Makesure your comments identify specific variances and

the impact of these variances on income.

Do not forget to use the IF function to determine if thevariance is favorable or unfavorable.

I used a formula approach like the author did and I expecteveryone to use cell references and use the Problem 2 worksheet asyour data for cell references.

I will take off 5 pts. if you have not used cell references fromthe problem 2 worksheet as your reference for the calculations. Iwill take off 3 pts. for not using IF statements or 1/2 each.

When you are adding multiple variances, either use the SUMIFfunction or a nested IF.

Also, make sure you are using ABS function, since variancesshould not be positive and negative.

I have color coded some areas that should match, since you canuse these variances to check your work since they should equal eachother.

Comments in "K" are worth 1 pt. You need to clearly identifymultiple sales variance you have calculated and the impact inincome.

a. Calculate the Static-budget variance.

$338,850

F

Static Budgeted Variance =Actual total contribution margin lessStatic total Contribution margin

Look at level 1 in Panel C in exhibit 14-11.

b. Calculate the contribution margin for the flexiblebudget.

Basic

Deluxe

Total

Budgeted contribution margin per unit

$58

$86

Do not Total

Actual Number of units sold

Do not Total

Flexible -Budget Contribution Margin

c. Calculate the flexible budget variance.

d. Calculate the sales-volume variance.

Check Figure: static budget variance=flexible budget

variance+Sales volume Variance

Basic

Deluxe

e. Calculate the Actual sales mix:

f. Calculate the Budgeted sales mix:

g . Compute the sales-mix variance for each product and then thetotal sales-mix variance like the table shown on page 572. I haveset up the table for you to fill in.

Actual Units of All products sold

(Actual sales-mix%-Budgeted Sales Mix%

Budgeted Contribution Margin per unit

Sales-Mix Variance

Basic

Deluxe

g. Total Sales mix variance

Compute the sales-quantity variance by type of product andtotal.

Basic

Deluxe

h. Total Sales quantity variance

Check Figure: Sales-volume variance=Sales mixvariance+Sales Quantity Variance

Calculate the Actual market share:

Calculate the Budgeted market share:

Calculate the budgeted contribution margin

per composite unit of budgeted mix

Lastly:

I. Market-share Variance

j. Compute the market-size variance.

Check Figure: Sales-quantity variance=Market-sharevariance+Market size Variance

k. Comment on the results of the above variance analysis. Makesure your comments identify specific variances and the impact ofthese variances on income.

CM per ti

increased decreased

above below

Budgeted SeatsSold

Actual SeatsSold

Lower tier

5,000

3,300

Upper tier

7,500

7,700

Total

12,500

11,000

Requirements