Question Details

Compute the sale-mix variance and the sales-quantity variance 



1.	The Chair Company manufactures two modular types of chairs, one for the residential market, and the other for the office market. Budgeted and actual operating data for the year 20x3 are:

	Static Budget	Residential	Office	Total
	Number of chairs sold	260,000	140,000	400,000
	Contribution margin	$26,000,000	$11,200,000	$37,200,000

	Actual Results	Residential	Office	Total
	Number of chairs sold	248,400	165,600	414,000
	Contribution margin	$22,356,000	$13,248,000	$35,604,000

	Prior to the beginning of the year, an office products research firm estimated the industry volume for residential and office chairs of the type sold by the Chair Company to be 2,400,000.  Actual industry volume for the year 20x3 was only 2,200,000 chairs.

	Required:

	Compute the following variances in terms of contribution margin.
	a.	Compute the total static-budget variance, the total flexible-budget variance, and the total sales-volume variance.
	b.	Compute the sale-mix variance and the sales-quantity variance by type of chair, and in total.
	c.	Compute the market-share variance and market-size variance.





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