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Exercise 14-22
Given:
Figure Four is a distributor of pharmaceutical products. Its ABC system has 5 activities.
Rick Flair, the controller of Figure Four, wants to use this ABC system to examine individual
customer profitability within each distribution market. He focuses first on the Ma and Pa
single-store distribution market. Two customers are used to exemplify the insights available
with the ABC approach. Data pertaining to these two customers in August 2012 are as
follows:
the basis of monthly operating income. The cumulative operating income of the top 20%
of customers is $55,680. Figure Four reports negative operating income of $21,247 for the
bottom 40% of its customers.
Make four recommendations that you think Figure Four should consider
in light of this new customer-profitability information.
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Exercise 14-25 Variance analysis, multiple products — sales variances |
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| Soda-King manufactures and sells 3 soft drinks: |
Kola |
Limor |
Orlem |
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actual results for 2011 are as follows: |
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Budget Information for 2011 |
Actual Information for 2011 |
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Selling Price |
Variable Cost |
Cartons |
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Product |
per Carton |
Sold |
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$8.00 |
$5.00 |
480,000 |
$8.20 |
$5.50 |
467,500 |
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$6.00 |
$3.80 |
720,000 |
$5.75 |
$3.75 |
852,500 |
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$7.50 |
1,200,000 |
$7.80 |
$5.60 |
1,430,000 |
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1. Use the post method to calculate the individual product and total product variances |
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requested below. Calculate all variances in terms of contribution margin. |
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a. Compute the sales-price variance for August 2011. |
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b. Compute the sales-mix variance for August 2011. |
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c. Compute the sales-quantity variance for August 2011. |
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d. Compute the sales-volume variance for August 2011. |
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2. What inferences can you draw from the variances computed in requirement #1? |
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Exercise 14-26 Market-share and market-size variances (continuation of 14-25). |
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Soda-King prepared the budget for 2011 assuming a 12% market share based on total sales |
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in the western region of the United States. The total soft drinks market was estimated to reach |
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sales of 20 million cartons in the region. However, actual total sales volume in the western |
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region was 27.5 million cartons. Calculate the market-share and market-size variances for Soda- |
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King in 2011. Calculate all variances in terms of contribution margin. Use the post method. |
