Problem 14-22 14-25 14-26 (Excel answer) attachment

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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.                                                                                                                                                                  

                                                                                                                                                                               

Exercise 14-25 Variance analysis, multiple products -- sales variances

  
        

Given:

       

Soda-King manufactures and sells 3 soft drinks:  Kola, Limor, and Orlem.  Budgeted and

 

actual results for 2011 are as follows:

     
        
 

 

Budget Information for 2011

 

 

Actual Information for 2011

 

 
 

Selling Price

Variable Cost

Cartons

Selling Price

Variable Cost

Cartons

 

Product

per Carton

per Carton

Sold

per Carton

per Carton

Sold

 

Kola

$8.00

$5.00

480,000

$8.20

$5.50

467,500

 

Limor

$6.00

$3.80

720,000

$5.75

$3.75

852,500

 

Orlem

$7.50

$5.50

1,200,000

$7.80

$5.60

1,430,000

 
        

1.  Use the post method to calculate the individual product and total product variances

 

     requested below.  Calculate all variances in terms of contribution margin.

  

     a.  Compute the sales-price variance for August 2011.

   

     b.  Compute the sales-mix variance for August 2011.

   

     c.  Compute the sales-quantity variance for August 2011.

   

     d.  Compute the sales-volume variance for August 2011.

   
        
       

 

2.  What inferences can you draw from the variances computed in requirement #1?

 

       

 

Exercise 14-26 Market-share and market-size variances (continuation of 14-25).

  

 

        

 

Given:

       

 

     Soda-King prepared the budget for 2011 assuming a 12% market share based on total sales

 

     in the western region of the United States.  The total soft drinks market was estimated to reach 

 

     sales of 20 million cartons in the region.  However, actual total sales volume in the western

 

     region was 27.5 million cartons.  Calculate the market-share and market-size variances for Soda-

 

     King in 2011.  Calculate all variances in terms of contribution margin.  Use the post method.

 

        

 

                     

 

                                                                                                                                                                                                                                                                                                                                                

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