MANAGEMENT ACCOUNTING - Solutions Manual

CHAPTER 25
MANAGING PRODUCTIVITY AND
MARKETING EFFECTIVENESS
I. Questions
1. Productivity is the relationship between the output and the input resources
required for generating the output.
2. A critical success factor for a firm that competes as a cost leader is to be
the low cost provider. A low cost provider needs to perform the required
tasks for the same output with fewer resources than its competitors.
3. Among criteria that often are used in assessing productivity and their
advantages and disadvantages are
Using a prior years productivity as the criterion
Advantages
!ata readily available
"acilitates monitoring of continuous improvements
!isadvantages
!ifficult to assess adequacy of productivity improvements
#ard to compare productivity improvements between the years
Using the best performance as the criterion
Advantages
Provides as the benchmark the utmost performance
$otivates people to strive for the ma%imum potential
!isadvantages
&he standard can be too high for the operation and frustrating to
workers
!ata may be difficult to obtain
&he criteria on which the operation is based may not be comparable
'. An operational productivity is the ratio of the output to the number of
units of an input resource.
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C!a"t#$ 25 Managing Productivity and Marketing Effectiveness
A financial productivity measures the relationship between the output and
the cost of one or more of the input resources.
(. A partial productivity is a productivity measure that focuses only on the
relationship between the amount of one of the input resources and the
output attained.
A total productivity measures the relationship between the output and the
total input costs of all the required input resources for the output.
). $anufacturing personnel often prefer operational productivity measures
over financial productivity measures because all the input data for
computing operational productivity measures are either results of their
activities or resources consumed for these activities. "inancial
productivity measures use costs of resources that often are results of
activities by personnel outside of manufacturing functions.
*. $easurements of marketing effectiveness include market share+ sales
price+ sales mi%+ and sales quantity variances.
,. -ales quantity variance is a component of sales volume variance. A sales
volume variance can be the result of both sales mi% and sales quantity
variances.
.. A market si/e variance measures the effect on the contribution margin and
operating income of a firm because of changes in the total market si/e for
all firms in the same industry or product segment. A market share
variance e%amines the effect on the contribution margin and operating
income of a firm because of deviations of the firm0s actual market shares
from its budgeted market shares.
11. a. 2o. A multi3product firm can still have an unfavorable sales volume
variance even if it sells more than the budgeted units of sales. &he
unfavorable sales volume variance is a result of selling more of less
profitable products and less of more profitable products.
b. A favorable sales quantity variance reflects the marketing manager0s
e%cellent performances only if there is no adverse change in selling
prices+ sales mi%+ or market si/e. A favorable sales quantity variance
is hardly favorable to the firm if the firm has lowered its selling prices
or sold more of low3priced+ low3margin and less of high3priced+ high3
margin products. Increases in the total market si/e in which the firm
operates often also leads to a favorable sales quantity variance. A
favorable sales quantity variance in an e%panding total market may
not be favorable to the firm strategically if the firm also has an
unfavorable market share variance.
25-2
Managing Productivity and Marketing Effectiveness C!a"t#$ 25
A firm can have a favorable market si/e variance and an unfavorable
market share variance if the proportional increase of the firm0s total
sales is less than those of the total market.
c. 4es. &he 5all -treet 6ournal reported on April 1'+ 1..' 7p. 8'9 that
:olgate3Palmolive had slashed marketing spending to reach its
ambitious target of 1( percent annual earnings growth. &he firm+ for
e%ample+ spent P,,., million on advertising in 1..3+ compared with
P.*.( million in 1..2. &he firm met the goal of a 1( percent increase
in per share earnings and its :;<+ $r. $ark+ e%pected the company
to announce a similar increase for first quarter earnings soon. &he
market share of the firm+ however+ have decreased in all categories.
11. &he sales volume variance is the sum of sales quantity and sales mi%
variances. &he sales quantity variance is the sum of market si/e and
market share variances.
II. Problems
P$o%l#& 'O"#$ational an( Finan)ial Pa$tial P$o(u)ti*it+,
Requirement 1
-tar :ompany
:omparative Income -tatement
"or the years 211( and 211)
211( 211)
-ales 1(+111 % P'1 = P)11+111 1,+111 % P'1 = P*21+111
>ariable cost of sales
$aterials 12+111 % P , = P .)+111 12+)11 % P11 = P12)+111
?abor )+111 % P21 = 121+111 (+111 % P2( = 12(+111
Power 1+111 % P 2 = 2+111 2+111 % P 2 = '+111
&otal variable costs of sales P21,+111 P2((+111
:ontribution margin P3,2+111 P')(+111
:hange in profits from 211( P')(+111 @ P3,2+111 = P,3+111 increase
Requirement 2
Operational Partial Productivity
2006 200
!$ 1,+111 A 12+)11 = 1.'2,) 1(+111 A 12+111 = 1.2(
!? 1,+111 A (+111 = 3.) 1(+111 A )+111 = 2.(
Power 1,+111 A 2+111 = . 1(+111 A 1+111 = 1(
25--
C!a"t#$ 25 Managing Productivity and Marketing Effectiveness
Requirement !
"otal cost of production factors
2006 200
!$ 12+)11 % P11 = P12)+111 12+111 % P , = P .)+111
!? (+111 % P2( = P12(+111 )+111 % P21 = P121+111
Power 2+111 % P 2 = P '+111 1+111 % P 2 = P 2+111
#inancial Partial Productivity
2006 200
!$ 1,+111 A 12)+111 = 1.1'2. 1(+111 A .)+111 = 1.1()2(
!? 1,+111 A 12(+111 = 1.1'' 1(+111 A 121+111 = 1.12(
Power 1,+111 A '+111 = '.( 1(+111 A 2+111 = *.(
Requirement $
8oth direct materials and direct labor operation partial productivity improved
from 211( to 211). In 211) the firm was able to manufacture more output
units for each unit of materials placed into production and for each hour spent
on production. &he operational productivity of power in 211) deteriorated
from 211(. It is likely that the firm used more equipment in production in
211) that reduced consumption of materials and production hours.
&he financial partial productivity for both direct materials and power
deteriorated from 211( to 211). Increases in direct materials costs were more
than the improvements in operational partial productivity for direct materials.
?ike the operational partial productivity+ the financial partial productivity for
direct labor also improved. &he e%tent of improvements+ however+ is much
lower in financial partial productivity. &he direct labor operational partial
productivity improved '' percent in 211) over those of 211(. &he financial
partial productivity+ however+ improved only 1(.2 percent between the two
years. &he decrease in financial partial productivity is likely a result of
increases in direct labor wages.
Requirement
Operating %ata for %ecomposing #inancial Productivity &easure
211) <utput+ 211) <utput 211) <utput 211( <utput
25-.
Managing Productivity and Marketing Effectiveness C!a"t#$ 25
1A211)
Productivity
1A211(
Productivity
1A211(
Productivity
1A211(
Productivity
211) Input cost 211) Input cost 211( Input cost 211( Input cost
'1( Output 'unit()
1,+111 1,+111 1,+111 1(+111
'2( 1*Productivity
!$ 12+)11A1,+111
= 1.*
12+111A1(+111
= 1.,
12+111A1(+111
= 1.,
12+111A1(+111
= 1.,
!? (+111A1,+111
= 1.2**,
)+111A1(+111
= 1.'
)+111A1(+111
= 1.'
)+111A1(+111
= 1.'
Power 2+111A1,+111
= 1.1111
1+111A1(+111
= 1.1))*
1+111A1(+111
= 1.1))*
1+111A1(+111
= 1.1))*
'!( +ost per unit of input
!$ P11 P11 P , P ,
!? P2( P2( P21 P21
Power P 2 P 2 P 2 P 2
'$( Output , '1*Productivity( , -nput cost
!$ 1,+111 % 1.* % 11
= P12)+111
1,+111 % 1., % 11
= P1''+111
1,+111 % 1., % ,
= P11(+211
1(+111 % 1., % ,
= P.)+111
!? 1,+111 % 1.2**, % 2(
= P12(+111
1,+111 % 1.' % 2(
= P1,1+111
1,+111 % 1.' % 21
= P1''+111
1(+111 % 1.' % 21
= P121+111
Power 1,+111 % 1.1111 % 2
= P'+111
1,+111 % 1.1))* % 2
= P2+'11
1,+111 % 1.1))* % 2
= P2+'11
1(+111 % 1.1))* % 2
= P2+111
&otal P2((+111 P32)+'11 P2)1+)11 P21,+111
%ecomposition
!$ 1,+111 A
12)+111
= 1.1'2.
1,+111 A 1''+111
= 1.12(
1,+111 A 11(+211
= 1.1()2(
1(+111 A .)+111
= 1.1()2(
!? 1,+111 A 12(+111
= 1.1''1
1,+111 A 1,1+111
= 1.1
1,+111 A 1''+111
= 1.12(
1(+111 A 121+111
= 1.12(
Power 1,+111 A
'+111
= '.(
1,+111 A 2+'11
= *.'.).
1,+111 A 2+'11
= *.'.).
1(+111 A 2+111
= *.'.)3
Productivity change Input price change <utput change
!$ 1.1'2. @ 1.12(
= 1.11*. "
1.12( @ 1.1()2(
= 1.1312( B
1.1()2( @ 1.1()2(
= 1
25-5
C!a"t#$ 25 Managing Productivity and Marketing Effectiveness
!? 1.1'' @ 1.1
= 1.1'' "
1.1 @ 1.12(
= 1.12( B
1.12( @ 1.12(
= 1
Power '.( @ *.'.).
= 2...). B
*.'.). @ *.'.).
= 1
*.'.). @ *.'.)3
= 1.111) 7rounding9
.ummary of Result
:hange as C of 211( Productivity
Productivity
:hange
Input Price
:hange
&otal
:hange
Productivity
:hange
Input Price
:hange
&otal
:hange
!$ 1.11*. " 1.1312( B 1.1133( B 11.')C " 21C B ,.('C B
!? 1.1'' " 1.12( B 1.11. " 3(.2C " 21C B 1(.2C "
Power 2...). B 1 2...). B 3...,C B 1 3...,C B
Requirement 6
Productivity for both direct materials and direct labor improved in 211). &he
percentages of improvements in productivity are 11.') and 3(.2 for direct
materials and direct labor+ respectively+ of the 211( productivity. #owever+
cost increases in direct materials and direct labor reduced the gains in
productivity on these two manufacturing factors.
P$o%l#& 2 'Di$#)t /a%o$ Rat# an( E00i)i#n)+ Va$ian)#s1 P$o(u)ti*it+
M#asu$#s1 an( Stan(a$( Costs,
Requirement 1
/ssembly %epartment %irect 0abor 1ariances
211(
&otal actual direct labor hours 2( % 21+111 = (11+111
&otal standard direct labor hours 2' % 21+111 = ',1+111
P31 % (11+111 P2, % (11+111 P2, % ',1+111
= P1(+111+111 = P1'+111+111 = P13+''1+111
25-2
Managing Productivity and Marketing Effectiveness C!a"t#$ 25
Date variance ;fficiency variance
= P1+111+111 B = P()1+111 B
211)
&otal actual direct labor hours 21 % 21+111 = '11+111
&otal standard direct labor hours 21 % 21+111 = '21+111
P3) % '11+111 P3( % '11+111 P3( % '21+111
= P1'+'11+111 = P1'+111+111 = P1'+*11+111
Date variance ;fficiency variance
= P'11+111 B = P*11+111 "
"esting %epartment %irect 0abor 1ariances
211(
&otal actual direct labor hours 12 % 21+111 = 2'1+111
&otal standard direct labor hours 1' % 21+111 = 2,1+111
P21 % 2'1+111 P21 % 2'1+111 P21 % 2,1+111
= P'+,11+111 = P(+1'1+111 = P(+,,1+111
Date variance ;fficiency variance
= P2'1+111 " = P,'1+111 "
211)
&otal actual direct labor hours 11 % 21+111 = 211+111
&otal standard direct labor hours 11 % 21+111 = 221+111
P2' % 211+111 P2( % 211+111 P2( % 221+111
= P'+,11+111 = P(+111+111 = P(+(11+111
Date variance ;fficiency variance
= P211+111 " = P(11+111 "
Decap
Assembly !epartment &esting !epartment
211( 211) 211( 211)
Date variance P1+111+111 B P'11+111 B P2'1+111 " P211+111 "
;fficiency variance P()1+111 B P*11+111 " P,'1+111 " P(11+111 "
25-3
C!a"t#$ 25 Managing Productivity and Marketing Effectiveness
Requirement 2
/ssembly %epartment Operational Partial Productivity
211( 21+111 A (11+111 = 1.1'
211) 21+111 A '11+111 = 1.1(
"esting %epartment Operational Partial Productivity
211( 21+111 A 2'1+111 = 1.1,33
211) 21+111 A 211+111 = 1.1
Requirement !
/ssembly %epartment #inancial Partial Productivity
211( 21+111 A P1(+111+111 = 1.111333
211) 21+111 A P1'+'11+111 = 1.1113,.
"esting %epartment #inancial Partial Productivity
211( 21+111 A P'+,11+111 = 1.11'1)*
211) 21+111 A P'+,11+111 = 1.11'1)*
Requirement $
Operational partial productivity
211( 211) :hange
Assembly 1.1' 1.1( 1.11 " 2(C "
&esting 1.1,33 1.1 1.11)* " 21C "
#inancial partial productivity
211( 211) :hange
Assembly 1.111333 1.1113,. 1.1111() " '.2C "
&esting 1.11'1)* 1.11'1)* 313 313
<perational partial productivity improved in both departments from 211( to
211). &he financial partial productivity in the Assembly also improved while
the &esting remains unchanged.
Requirement
25-4
Managing Productivity and Marketing Effectiveness C!a"t#$ 25
&he standards in a standard costing system often are determined independently
and incorporate changes in operating factors. &he standard for the operation
of a year may change because of changes in+ for e%ample+ technology+ quality
of materials+ e%perience of production workers+ designs+ or processes.
Productivity measures use as the criterion the productivity of a prior year
without adEusting for changes occurred or the e%pected changes for the current
year. As a result+ assessments of productivity may depict an entirely different
picture than those of variance analyses in a standard costing system.
P$o%l#& - 'Sal#s Va$ian)#,
Requirement 1
-elling price variances 7in 1119
"le%ible budget sales
&aster 2udget for 200 8udgeted &otal Bnits "le%ible
&otal
-ales Bnits
-elling Price
Per Bnit
-old in
211(
8udget
-ales
Premium P3)+111 2'1 = P1(1 % 1,1 = P2*+111
Degular P'3+211 3)1 = P121 % ('1 = P)'+,11
Premium Regular
Actual
"le%ible
8udget
-elling
Price
>ariance Actual
"le%ible
8udget
-elling
Price
>ariance
8arrels 1,1 1,1 ('1 ('1
-ales P2,+,11 P2*+111 P1+,11 " P)2+111 P)'+,11 P2+*11 B
&otal selling price variance of the firm = P1+,11 " F P2+*11 B = P.11 B
Requirement 2
-ales volume variances for the period for each of the products and for the firm
25-5
C!a"t#$ 25 Managing Productivity and Marketing Effectiveness
"le%ible budget variable e%penses
&aster 2udget for 200 8udgeted &otal "le%ible
&otal
>ariable
;%penses
2umber of
Bnits
>ariable
;%penses
Per Bnit
Bnits
-old in
211(
8udget
>ariable
;%penses
Premium P21+)11 2'1 = P.1 % 1,1 = P1)+211
Degular P2*+111 3)1 = P*( % ('1 = P'1+(11
Premium Regular
"le%ible
8udget
$aster
8udget
-ales
>olume
>ariance
"le%ible
8udget
$aster
8udget
-ales
>olume
>ariance
8arrels 1,1 1,1 ('1 3)1
-ales P2*+111 P3)+111 P)'+,11 P'3+211
>ariable
e%penses 1)+211 21+)11 '1+(11 2*+111
:ontribution
margin P11+,11 P1'+'11 P3+)11 B P2'+311 P1)+211 P,+111 "
"i%ed
e%penses 11+111 11+111 @ (+111 (+111 @
<perating
income P ,11 P '+'11 P3+)11 B P1.+311 P11+211 P,+111 "
&otal sales volume variance of the firm = P3+)11 B F P,+111 " = P'+(11 "
Requirement !
-ales quantity variances for the firm and for each of the products. 7-ee ne%t
page.9
Requirement $
-ales mi% variances for the period for each of the products and for the firm
7111 omitted9.
:alculation for sales mi%es
2udgeted /ctual
&otal -ales
in Bnits
-ales
$i%
&otal -ales
in Bnits
-ales
$i%
Premium 2'1 1.'1 1,1 1.2(
Degular 3)1 1.)1 ('1 1.*(
)11 1.11 *21 1.11
"le%ible 8udget $aster 8udget
&otal actual units of all
products sold % Actual
&otal actual units of
all products sold %
&otal budgeted units of
sales for all products %
25-6
Managing Productivity and Marketing Effectiveness C!a"t#$ 25
sales mi% % -tandard
contribution margin per
unit
8udgeted sales mi% %
-tandard contribution
margin per unit
8udgeted sales mi% %
-tandard contribution
margin per unit
Premium
*21 % 1.2( % P)1 = P11+,11 *21 % 1.'1 % P)1 = P1*+2,1 )11 % 1.'1 % P)1 = P1'+'11
-ales mi% variance -ales quantity variance
= P)+',1 B = P2+,,1 "
-ales volume variance
= P11+,11 @ P1'+'11
= P3+)11 B
&o verify -ales volume variance
= -ales mi% variance F -ales quantity variance
= P)+',1 B F P2+,,1 "
= P3+)11 B
Degular
*21 % 1.*( % P'( = P2'+311 *21 % 1.)1 % P'( = P1.+''1 )11 % 1.)1 % P'( = P1)+211
-ales mi% variance -ales quantity variance
= P'+,)1 " = P3+2'1 "
-ales volume variance
= P2'+311 @ P1)+211
= P,+111 "
&o verify -ales volume variance
= -ales mi% variance F -ales quantity variance
= P'+,)1 " F P3+2'1 "
= P,+111 "
&otal
-ales mi% variance = P)+',1 B F P'+,)1 " = P1+)21 B
-ales quantity variance = P2+,,1 B F P3+2'1 " = P)+121 "
25-
C!a"t#$ 25 Managing Productivity and Marketing Effectiveness
Requirement
>erification
-ales mi% variance F -ales quantity variance = -ales volume variance
Premium P)+',1 B P2+,,1 " P3+)11 B
Degular P'+,)1 " P3+2'1 " P,+111 "
&otal P1+)21 B P)+121 " P'+(11 "
Requirement 6
$arket si/e variances. 7-ee below.9
Requirement 3
$arket share variances 7111 omitted. -ee below.9
5eighted average budgeted contribution margin per unit
$aster budget total contribution margin P31+)11
$aster budget total sales units )11
5eighted3average budgeted contribution margin per unit P (1
+alculation for mar4et shares
8udgeted &otal sales in units )11 &otal sales of the industry 1+(11 = 1.'1
Actual &otal sales in units *21 &otal sales of the industry 1+)11 = 1.'(
+alculation for variances
Actual total market
si/e % Actual market
share % Average
budgeted contribution
margin per unit
Actual total market %
8udgeted market
share % Average
budgeted contribution
margin per unit
8udgeted total market
si/e % 8udgeted market
share % Average
budgeted contribution
margin per unit
1+)11 % 1.'( % P(1 1+)11 % 1.'1 % P(1 1+(11 % 1.'1 % P(1
= P3)+*21 = P32+)'1 = P31+)11
$arket share variance $arket si/e variance
= P'+1,1 " = P2+1'1 "
-ales quantity variance
= P'+1,1 " F P2+1'1 "
= P)+121 "
Requirement 5
25-2
Managing Productivity and Marketing Effectiveness C!a"t#$ 25
&he sum of market si/e variance and market share variance and verification
that this total equals the sales quantity variance.
&otal market si/e variance F &otal market share variance = &otal quantity variance
P2+1'1 " P'+1,1 " P)+121 "
P$o%l#& . 'P$o(u)ti*it+ an( Et!i)s,
Requirement 1
&he operational partial productivity deteriorates slightly from 1.11(1 in 211(
7(11A..+1119 to 1.11( in 211) 7()1A112+1119. $anipulating accounting
numbers in order to show a desirable result is an unethical behavior regardless
the intention.
Requirement 2

&an should not follow the order without following a consistent accounting
method. If the firm believes that certain cost items should be reclassified as
indirect costs+ the same procedure should be followed for all years. &an
should then go back and revise operating results of previous years.
P$o%l#& 5 'S&all 7usin#ss Ma$8#t Si9# an( S!a$# Va$ian)#s,
Requirement 1
2udget /ctual
6mpress
%esigns -ndustry .hare
6mpress

%esigns -ndustry .hare
5- (1 (11 11.1C '( '2( '(A'2(
!# 2( 211 12.(C 3( 1(1 3(A1(1
Requirement 2
7eighted /verage 2udgeted +ontribution &argin Per Unit)
7(1 welcome signs % P29 F 72( doghouses % P(.219 A *( = P3.1*
25--
C!a"t#$ 25 Managing Productivity and Marketing Effectiveness
&ar4et .hare 1ariance
5elcome -igns 7'(A'2( @ 1.19 % '2( % P3.1* = P*.), "
!oghouses 73(A1(1 @ 2(A2119 % 1(1 % P3.1* = P'..,. "
Requirement !
&ar4et .i8e 1ariance
5elcome -igns 7'( @ (119 % (1A(11 % P3.1* = P23.13 B
!oghouses 71(1 @ 2119 % 2(A211 % P3.1* = P1..1. B
Requirement $
Among possible reasons are quality changes+ pricing changes+ less producers
due to seasonal variations+ and market no longer there.
Requirement
Among alternatives are improving costs through adopting activity based
costing+ making different signs+ using less e%pensive wood+ finding
competitive advantage.
III. Multiple Choice Questions
1. A 11. A 21. A
2. : 12. 8 22. !
3. 8 13. A 23. :
'. ! 1'. 8 2'. !
(. A 1(. :
). : 1). !
*. : 1*. 8
,. 8 1,. :
.. : 1.. A
11. ! 21. !
Supporting Computations:
Operational partial productivity
211( 211)
25-.
Managing Productivity and Marketing Effectiveness C!a"t#$ 25
<utput
Input
Desource
Bsed
Partial
Productivity <utput
Input
Desource
Bsed
Partial
Productivity
G3'( )1+111 *(+111 = 6:4 )'+111 ,.+)11 = 6:3.-
!irect
labor )1+111 11+111 = 2:6 )'+111 11+,'* = 5:5662
#inancial partial productivity
211( 211)
Bnits of
<utput
:ost of Input
Desource
Bsed
Partial
Productivity
Bnits of
<utput
:ost of Input
Desource
Bsed
Partial
Productivity
G3'( )1+111 P('1+111 = 6: )'+111 P)1.+2,1 = 6:656
!irect
labor )1+111 311+111 = 6:2 )'+111 P3'*+11' = 6:4..
"otal productivity in units
211( 211)
7a9 &otal units manufactured )1+111 )'+111
7b9 &otal variable manufacturing costs
incurred P,'1+111 P.()+3,'
7c9 &otal productivity 7a9 7b9
6:63.25 '5, 1.1)).1.
7d9 !ecrease in productivity 1.1*1'2. @ 1.1)).1. = 6:66.5 '2,
"otal productivity in sales pesos
211( 211)
7a9 &otal sales P1+(11+111 P1+)11+111
7b9 &otal variable manufacturing costs
incurred P,'1+111 P.()+3,'
7c9 &otal productivity 7a9 7b9
P:3453 '5, P1.)*31
7d9 !ecrease in productivity P1.*,(* @ P1.)*31 = P6:23 '2,
'3, Operational partial productivity
'4, #inancial partial productivity
200 2006
719 <utput '11+111 ',)+111
729 !irect materials
Huantity 1)1 1,1
Bnit cost % P3+3*( % P3+12(
25-5
Actual Production
Actual Input
.+(11
,+.(1
= = <perational Partial Productivity = :62
',
'2,
'-,
'.,
C!a"t#$ 25 Managing Productivity and Marketing Effectiveness
&otal direct materials cost P('1+111 P()2+(11
739 !$ financial partial
productivity 719 729 1.*'1* 6:42.
7'9 !irect labor
#our spent 11+111 13+(11
#ourly wage % P2) % P2(
&otal direct labor cost P2)1+111 P33*+(11
7(9 !? financial partial
productivity 719 7'9 1.(3,( 1.''
'5, &otal productivity
200 2006
719 <utput '11+111 ',)+111
&otal cost
!irect materials cost P('1+111 P()2+(11
!irect labor cost 2)1+111 33*+(11
729 &otal cost P,11+111 P.11+111
739 &otal productivity 719 729 6:5 1.('
&ar4et .hare
#irm "otal &ar4et &ar4et .hare
Actual 111+111 A 2+111+111 = (C
8udget .1+111 A 1+(11+111 = )C
1. $arket si/e variance 72+111+111 @ 1+(11+1119 % 1.1) % P, = P2.61666 F '6,
2. $arket share variance 7(C 3 )C9 % 2+111+111 % P, = P261666 U ',
3. -ales quantity variance 7111+111 @ .1+1119 % P, = P 461666 F '2,
'-,
Product / Product 2 "otal
8udgeted sales unit 31+111 )1+111 .1+111
8udgeted contribution margin per
unit % P'.11 % P11.11
8udgeted total contribution margin P121+111 P)11+111 P*21+111
8udgeted average contribution
margin per unit P4:66
'.,
Product / Product 2 "otal
25-2
Managing Productivity and Marketing Effectiveness C!a"t#$ 25
Actual units sold 3(+111 )(+111
8udgets sales unit @ 31+111 @ )1+111
!ifferences in sales units (+111 (+111
8udgeted contribution margin per
unit % P'.11 % P11.11
-ales volume contribution margin
variance P21+111 " P(1+111 " P361666 F
-ales mi%es
8udgeted Actual
Bnit C Bnit C
Product A 31+111 1A3 3(+111 3(
Product 8 )1+111 2A3 )(+111 )(
&<&A? .1+111 111 111+111 111
'5,-ales mi% contribution margin variance
Product A 71.3( @ 1A39 % 111+111 % P' = P 21223 F
Product 8 71.)( @ 2A39 % 111+111 % P11 = 21223 U
&otal sales mi% contribution margin variance P11+111 B
'2,-ales quantity contribution margin variance
Product A 7111+111 @ .1+1119 % 1A3 % P' = P-1--- F
Product 8 7111+111 @ .1+1119 % 2A3 % P11 = 221223 F
&otal sales quantity contribution margin variance P,1+111 "
'3,5eighted average budget contribution margin per unit
P,.11 7calculated in no. 139
$arket si/e contribution margin variance
72+111+111 @ 1+(11+1119 % .1+111 A 1+(11+111 % P, = P2.61666 F
'4,$arket share contribution margin variance
7111+111 A 2+111+111 @ .1+111 A 1+(11+1119 % 2+111+111 % P, =
P261666 U
'5,"le%ible budget contribution margin variance
"le%ible
8udget
25-3
C!a"t#$ 25 Managing Productivity and Marketing Effectiveness
&otal :ontribution margin :ontribution
Actual <perating Desult "le%ible 8udget $argin >ariance
Product A 3(+111 % P3 = P11(+111 3(+111 % P' = P1'1+111 P 3(+111 B
Product 8 )(+111 % P12 = P*,1+111 )(+111 % P11 = P)(1+111 P131+111 "
&<&A? P,,(+111 P*.1+111 P 551666 F
'26,&otal contribution margin price variance 7given9 P(1+111 "
-ales price variance
Product A 7P12 @ P119 % 3(+111 = P*1+111 "
Product 8 7P2' @ P2(9 % )(+111 = P)(+111 B
&otal sales price variance @ (+111 "
&otal variable cost price variance P.51666 F
'2,&otal fle%ible budget contribution margin variance P.(+111 "
&otal contribution margin price variance 7given9 (1+111 "
&otal variance cost efficiency variance P.51666 F
'22,-ales mi% ratio
/ctual 2udget
9uantity Ratio 9uantity Ratio
D)) 1+111 1.(1 1+211 1.*(
D111 1+111 1.(1 '11 1.2(
&<&A? 2+111 1.11 1+)11 1.11
D)) sales quantity variance 72+111 @ 1+)119 % 1.*( % P11 = P-1666 F
'2-,D111 sales mi% variance 71.( @ 1.2(9 % 2+111 % P*1 = P-51666 F
'2.,&otal sales volume variance
D)) 71+111 @ 1+2119 % P11 = P 2+111 B
D111 71+111 @ '119 % P*1 = '2+111 "
&otal P.61666 F
25-4