3510 sample MT2 SOLUTIONS

3510 sample MT2 SOLUTIONS - AK/ADMS 3510 3.0: Fall 2009:...

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AK/ADMS 3510 3.0: Fall 2009: MT#2: SOLUTIONS Question 1: (25 marks) William’s Motors sells electric motors. There are two models: ½ HP and 5 HP. During January 2003 the following activities occurred: ½ HP 5 HP Budgeted sales units 10,000 4,000 Actual units sold 10,500 3,800 Budgeted contribution margin per unit $20 $50 Actual contribution margin per unit $18 $55 Required: calculate: i) the sales volume variance for each product and in total; ½ HP 5 HP Total Budgeted sales units 10,000 4,000 Actual sales units 10,500 3,800 Change + 500 - 200 Budgeted contribution margin $20 $50 Sales volume variance $10,000 F $10,000 U nil ii) the sales mix variance for each product and in total; ½ HP 5 HP Total Budgeted sales 10,000 4,000 14,000 Percentage 71.43% 28.57% 100% Actual sales 10,500 3,800 14,300 Percentage 73.43% 26.57% 100% Budgeted contribution margin $20 $50 Sales mix variance: 14,300 * (73.43%-71.43%) * $20 $5,720 F 14,300 * (26.57%-28.57%) * $50 $14,300 U $5,720 F + $14,300 U $8,580 U iii) the sales quantity variance for each product and in total. ½ HP 5 HP Total Budgeted sales 10,000 4,000 14,000 Percentage 71.43% 28.57% 100% Actual sales 10,500 3,800 14,300 Sales quantity variance: (14,300 – 14,000) * 71.43% * $20 $4,286 F (14,300 – 14,000) * 28.57% * $50 $4,285 F $4,286 + $4,285 $8,571 iv) Which are more important: cost related variances or sales related variances? (5 marks). Sales related variances are generally more $ and more strategically important
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Question 2: (25 marks) Quaker Corporation manufactures various types of colour laser printer in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various colour laser printers on the market are comparable in terms of features and prices. Quaker believes that satisfying customers with products of high quality and low cost is key to achieving its target profitability. For 2010 Quaker plans to achieve higher quality and lower costs by improving
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3510 sample MT2 SOLUTIONS - AK/ADMS 3510 3.0: Fall 2009:...

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