MANAGEMENT ACCOUNTING - Solutions Manual
CHAPTER 25 MANAGING PRODUCTIVITY AND MARKETING EFFECTIVENESS
I.
Questions
1.
Productivity Productivity is the relation relationship ship betwe between en the the output output and the input input resources resources required for generating the output.
2.
A critical critical succe success ss factor factor for a firm that that compet competes es as a cost leader leader is to to be the low cost provider. provider. A low cost provider needs to perform perform the required tasks for the same output with fewer resources than its competitors.
3.
Amon Among g criter criteria ia that that ofte often n are used used in assess assessin ing g produc producti tivi vity ty and thei their r advantages and disadvantages are Using a prior year’s 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 operat operatio ional nal produ producti ctivi vity ty is the ratio of the output output to the numbe numberr of units of an input resource. 25-1
Managing Productivit y and Marketing Effectiveness Chapter 25
A financial productivity measures the relationship between the output and the cost of one or more of the input resources. (.
A partial partial product productivi ivity ty is a producti productivity vity measur measuree that focuses focuses only on 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.
).
$anufacturi $anufacturing ng personn personnel el often often prefer operatio operational nal productiv productivity ity measure measuress over over financ financial ial producti productivit vity y measure measuress because because all the the input input data for computing operational productivity measures are either results of their activ activit itie iess or reso resourc urces es cons consum umed ed for for thes thesee activ activit itie ies. s. "inan "inancia ciall productivity productivity measures measures use costs of resources that often are results of activities by personnel outside of manufacturing functions.
*.
$easur $easurem emen ents ts of marke marketi ting ng effe effecti ctive vene ness ss incl includ udee marke markett share share++ sales sales price+ sales mi%+ mi%+ and sales quantity quantity variances. variances.
,.
-ales quant quantity ity varianc variancee is a compon component ent of of sales volu volume me varian variance. ce. A sales sales volume variance can be the result of both sales mi% and sales quantity variances.
.
A market si/e si/e variance variance measures measures the effe effect ct on the the contribution contribution margin margin and operating income of a firm because of changes in the total market si/e for all firms in the same industry industry or product product segmen segment. t. A marke markett 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.
1. a.
o. A multi multiprod product uct firm firm can still still have have an unfav unfavorab orable le sales sales volum volumee variance even even if it sells more more than the budgeted budgeted units units of sales. &he unfavorable sales volume variance is a result of selling more of less profitable products and less less of more more profitable profitable products.
b. A favorable sales quantity variance reflects 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 variance is hardly favorable to the firm if the firm has lowered its selling prices or sold more of lowpriced+ lowmargin and less of highpriced+ high margin products. Increases in the total market si/e in which the firm operates often often also leads leads to a favorable sales quantity quantity variance. 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 Productivit y and Marketing Effectiveness Chapter 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 &he 5al 5alll -treet -treet 6ournal 6ournal repor reported ted on on Apri Aprill 1'+ 1' 7p. 7p. 8'9 that :olgate :olgatePalm Palmol oliv ivee had slashe slashed d marketi marketing ng spend spending ing to reach reach its ambitious target of of 1( percent annual earnings growth. &he firm+ for e%ample+ spent P,,., million on advertising in 13+ compared with P*.( million in 12. &he firm met met the goal of a 1( percent increase in per share earnings and its :;<+ $r. $ark+ e%pected the company to announce announce a similar increase increase for first quarter earnings soon. soon. &he market share of the firm+ however+ have decreased in all categories.
11. &he sales volum volumee variance variance is the sum of sales quantity quantity and sales mi% variance variances. s. &he &he sales quantity quantity variance variance is the sum of market market si/e and market share variances. II. Problems Problem 1 Operational an! "inan#ial Partial Pro!u#ti$it%&
Requirement Requirement 1 -tar :ompany :omparative Income -tatement "or the years 2( and 2)
-ales >ariable >ariable cost of sales $aterials ?abor Power &otal variable costs of sales :ontribution margin
1(+ % P' = 12+ % P , = )+ % P2 = 1+ % P 2 =
2( P)+ P )+ 12+ 2+ P21,+ P3,2+
1,+ % P' = 12+) % P1 = (+ % P2( = 2+ % P 2 =
2) P*2+ P12)+ 12(+ '+ P2((+ P')(+
:hange in profits from 2( P')(+ @ P3,2+ = P,3+ increase
Requirement Requirement 2 Operational Partial Productivity
!$ !? Power
2006 1,+ 12+) = 1,+ (+ = 1,+ 2+ =
1.'2,) 3. 3 .)
25-'
200 1(+ 12+ = 1(+ )+ = 1(+ 1+ =
1.2( 2. ( 1(
Chapter 25 Managing Productivity Productivi ty and Marketing Effectiveness
Requirement Requirement ! "otal cost of production factors
!$ !? Power
2006 12+) % P1 = (+ % P2( = 2+ % P 2 =
P12)+ P12(+ P '+
200 12+ % P , = )+ % P2 = 1+ % P 2 =
P )+ P12+ P 2+
#inancial Partial Partial Productivity Productivity
!$ !? Power
2006 1,+ 12)+ = .1'2 1,+ 12(+ = . .1'' 1,+ '+ = '.(
200 1(+ )+ = .1()2( 1(+ 12+ = .12( 1(+ 2+ = *.(
Requirement Requirement $ 8oth direct materials and direct labor operation partial productivity improved from 2( to 2). In 2) the firm was was able to manufacture manufacture more output output units for each unit of materials placed into production and for each hour spent on production. production. &he operational operational productivity productivity of power in 2) deteriorated deteriorated from 2(. It is likely that the firm used more more equipmen equipmentt in production production in 2) that reduced consumption of materials and production hours. &he finan financi cial al partial partial produc producti tivi vity ty for both both direc directt mate materia rials ls and and powe power r deteriorated from 2( to 2). Increases in direct materials costs were more 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. improved. &he e%tent e%tent of improvemen improvements+ ts+ however+ however+ is much lower lower in financial partial productivity productivity.. &he direct direct labor operational partial productivity productivity improved improved '' percent percent in 2) over those of 2(. &he financial partial productivity productivity++ however however++ improved improved only 1(.2 percent percent between between the two years. years. &he &he decrea decrease se in financial financial partial producti productivit vity y is like likely ly a result result of increases in direct labor wages. Requirement Requirement Operating %ata for %ecomposing #inancial Productivity Productivity &easure 2)
2)
2)
2(
Managing Productivit y and Marketing Effectiveness Chapter 25
12) Productivity 2) Input cost
12( Productivity 2) Input cost
12( Productivity 2( Input cost
12( Productivity 2( Input cost
1,+
1,+
1(+
12+1(+ = ., )+1(+ = .' 1+1(+ = .))*
12+1(+ = ., )+1(+ = .' 1+1(+ = .))*
12+1(+ = ., )+1(+ = .' 1+1(+ = .))*
P , P2 P 2
P , P2 P 2
1,+ % ., % 1 = P1''+ 1,+ % .' % 2( = P1,+ 1,+ % .))* % 2 = P2+'1 P32)+'1
1,+ % ., % , = P11(+2 1,+ % .' % 2 = P1''+ 1,+ % .))* % 2 = P2+'1 P2)1+)1
1(+ % ., % , = P)+ 1(+ % .' % 2 = P12+ 1(+ % .))* % 2 = P2+1 P21,+1
1,+ 1''+ = .12(
1,+ 11(+2 = .1()2(
1(+ )+ = .1()2(
1,+ 1,+ = .1 1,+ 2+'1 = *.')
1,+ 1''+ = .12( 1,+ 2+'1 = *.')
1(+ 12+ = .12( 1(+ 2+1 = *.')3
'1( Output 'unit() 1,+ '2( 1*Productivity !$ 12+)1,+ = .* !? (+1,+ = .2**, Power 2+1,+ = .1111
'!( +ost per unit of input !$ P1 !? P2( Power P 2
P1 P2( P 2
'$( Output , '1*Productivity( , -nput cost !$ 1,+ % .* % 1 = P12)+ !? 1,+ % .2**, % 2( = P12(+1 Power 1,+ 1,+ % .1111 % 2 = P'+ &otal P2((+1
%ecomposition !$ 1,+ 12)+ = .1'2 !? 1,+ 12(+1 = .1'' Power Power 1,+ '+ = '.(
Productivity change !$
.1'2 @ .12( = .1* "
Input price change .12( @ .1()2( = .312( B 25-5
Chapter 25 Managing Productivity Productivi ty and Marketing Effectiveness
!?
.1'' @ .1 = .'' " Power Power '.( @ *.') = 2.) B
.1 @ .12( = .2( B *.') @ *.') =
.12( @ .12( = *.') @ *.')3 = .) 7rounding9
.ummary of Result
!$ !? Power
Productivity :hange .1* " .'' " 2.) B
Input Price :hange .312( B .2( B
&otal :hange .133( B .1 " 2.) B
:hange as C of 2( Productivity Productivity Input Price &otal :hange :hange :hange 11.')C " 2C B ,.('C B 3(.2C " 2C B 1 (. 2 C " 3.,C B 3 . , C B
Requirement Requirement 6 Productivity for both direct materials and direct direct labor improved in 2). &he percentages percentages of improvem improvements ents in productivity productivity are 11.') and 3(.2 for direct materials and direct labor+ respectively respectively++ of the 2( productivity productivity.. #owever #owever++ cost increases increases in direct direct material materialss and direct direct labor labor reduce reduced d the gains in productivity productivity on on these these two manufacturin manufacturing g factors.
Problem Problem 2 )ire#t )ire#t *abor +ate an! E,,i#ien#% E,,i#ien#% arian arian#es. #es. Pro!u#ti$ Pro!u#ti$it% it% Measures. an! Stan!ar! Costs&
Requirement Requirement 1 /ssembly %epartment %epartment %irect abor a ariances 2( &otal tal actu actual al direc irectt labo laborr hours ours &otal &otal stand standard ard dire direct ct labor labor hours hours P3 % (+ = P1(++
2( % 2+ 2+ = (+ (+ 2' % 2+ 2+ = ',+ ',+
P2, % (+ = P1'++
25-/
P2, % ',+ = P13+''+
Managing Productivit y and Marketing Effectiveness Chapter 25
Date variance = P1++ B
;fficiency ;fficiency variance = P()+ B
2) &otal tal actu actual al direc irectt labo laborr hours ours &otal &otal stand standard ard dire direct ct labor labor hours hours P3) % '+ = P1'+'+
2 % 2+ 2+ = '+ '+ 21 % 2+ 2+ = '2+ '2+
P3( % '+ = P1'++
Date variance = P'+ B
P3( % '2+ = P1'+*+
;fficiency ;fficiency variance = P*+ "
"esting %epartment %irect abor ariances 2( &otal tal actu actual al direc irectt labo laborr hours ours &otal &otal stand standard ard dire direct ct labor labor hours hours P2 % 2'+ = P'+,+
12 % 2+ 2+ = 2'+ 2'+ 1' % 2+ 2+ = 2,+ 2,+
P21 % 2'+ = P(+'+
Date variance = P2'+ "
;fficiency ;fficiency variance = P,'+ "
2) &otal tal actu actual al direc irectt labo laborr hours ours &otal &otal stand standard ard dire direct ct labor labor hours hours P2' % 2+ = P'+,+
P21 % 2,+ = P(+,,+
1 % 2+ 2+ = 2+ 2+ 11 % 2+ 2+ = 22+ 22+
P2( % 2+ = P(++
Date variance = P2+ "
P2( % 22+ = P(+(+
;fficiency ;fficiency variance = P(+ "
Decap
Date variance ;fficiency variance
Assembly !epartment 2( 2) P1++ B P'+ B P()+ B P*+ " 25-0
&esting !epartment 2( 2) P2'+ " P2+ " P,'+ " P(+ "
Chapter 25 Managing Productivity Productivi ty and Marketing Effectiveness
Requirement Requirement 2 /ssembly %epartment %epartment Operational Partial Productivity Productivity 2( 2)
2+ (+ = . .' 2+ '+ = . .(
"esting %epartment Operational Partial Productivity 2( 2)
2+ 2'+ = . .,33 2+ 2+ = .1
Requirement Requirement ! /ssembly %epartment %epartment #inancial Partial Produc Productivity tivity 2( 2)
2+ P1(++ = .1333 2+ P1'+'+ = .13,
"esting %epartment #inancial Partial Productivity 2( 2+ P'+, +,+ = . .'1)* 2) 2+ P'+, +,+ = . .'1)* Requirement Requirement $ Operational partial productivity productivity Assembly &esting
2( .' .,33
2) .( . 1
.1 .1)*
:hange " 2(C " 2C
" "
#inancial partial productivity productivity Assembly &esting
2( .1333 .'1)*
2) .13, .'1)*
:hange .() " '.2C
"
25-
Managing Productivit y and Marketing Effectiveness Chapter 25
&he standards in a standard costing system often are determined independently and incorporate incorporate changes changes in operating operating factors. &he standard for the operation 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 asse ssments of productivity may depict depict an entirely different different picture than those those of of variance analyses analyses in a standard costing costing system. system.
Problem ' Sales arian#e&
Requirement Requirement 1 -elling price variances 7in 9 "le%ible budget sales
Premium Degular
8arrels -ales
&aster udget for 200 8udgeted &otal Bnits "le%ible &otal -elling Price -old in 8udget -ales Bnits Per Bnit 2( -ales P1( % 1, = P2*+ P3)+ ÷ 2' = P12 % (' = P)'+, P'3+2 ÷ 3) = Premium Premium Regular -elling -elling "le%ible Price "le%ible Price Actual 8udget >ariance Actual 8udget >ariance 1, 1, (' (' P2,+, P2*+ P1+, " P)2+1 P)'+, P2+* B
&otal selling price variance of the firm = P1+, " F P2+* B = P B
Requirement Requirement 2 -ales volume variances for the period for each of the products and for the firm 25-
Chapter 25 Managing Productivity Productivi ty and Marketing Effectiveness
"le%ible budget variable e%penses
Premium Degular
&aster udget for 200 &otal >ariable umber of ;%penses Bnits P21+) ÷ 2' = P2*+ ÷ 3) =
8udgeted >ariable ;%penses Per Bnit P P*(
% %
Premium Premium
8arrels -ales >ariable e%penses :ontribution margin "i%ed e%penses
"l "le%ible 8udget >ariable ;%penses P1)+2 P'+(
Regular
"le%ible 8udget 1, P2*+
$aster 8udget 1, P3)+
1)+2
21+)
P1+,
P1'+'
1+ ,
P
&otal Bnits -old in 2( 1, = (' =
-ales >olume >ariance
"le%ible 8udget (' P)'+,
$aster 8udget 3) P'3+2
'+(
2*+
P3+) B
P2'+3
P1)+2
1+
@
(+
(+
P '+'
P3+) B
P1+3
P11+2
-ales >olume >ariance
P,+1 "
@ P,+1 "
&otal sales volume variance of the firm = P3+) B F P,+1 " = P'+( "
Requirement Requirement ! -ales quantity variances variances for the firm and and for each of the products. products. 7-ee ne%t ne%t page.9 Requirement Requirement $ -ales mi% variances for the period for each of the products and for the firm 7 omitted9. :alculation for sales mi%es
Premium Degular
udgeted &otal -ales -ales in Bnits $i% 2' .' 3) .) ) 1.
"le%ible 8udget &otal &otal actual un its of all &otal &otal actual un its of products sold % Actual all products sold %
25-13
/ctual &otal -ales in Bnits 1, (' *2
-ales $i% .2( .*( 1.
$aster 8udget &otal budgeted units of sales for all products % 8udgeted sales mi% %
Managing Productivit y and Marketing Effectiveness Chapter 25 sales mi% % -tandard contribution margin per unit
8udgeted sales mi% % -tandard contribution margin per unit
Premium *2 *2 % .2 .2( % P) P) = P1+ P1+, ,
*2 *2 % .' .' % P) P) = P1* P1*+2, +2,
-ales mi% variance = P)+', B
-tandard contribution margin per unit
) ) % .' .' % P) P) = P1'+ P1'+' '
-ales quantity variance = P2+,, "
-ales volume variance = P1+, @ P1'+' = P3+) B
&overify -ales volume variance = -ale -aless mi% mi% vari varian ance ce F -ale -aless quan quanti tity ty vari varian ance ce = P)+', B F P2+,, " = P3+) B Degular *2 *2 % .* .*( % P'( P'( = P2'+ P2'+3 3
*2 *2 % .) .) % P' P'( = P1 P1+'' +''
-ales mi% variance = P'+,) "
) ) % .) .) % P'( P'( = P1)+ P1)+2 2
-ales quantity variance = P3+2' "
-ales volume variance = P2'+3 @ P1)+2 = P,+1 " &overify -ales volume variance = -ale -aless mi% mi% vari varian ance ce F -ale -aless quan quanti tity ty vari varian ance ce = P'+,) " F P3+2' " = P,+1 " &otal -ale -aless mi% mi% vari varian ancce = P)+' P)+', , B F P'+,) P'+,) " = P1+) P1+)2 2 B -ales quantity variance variance = P2+,, B F P3+2' " = P)+12 "
Requirement Requirement >erification Premium
-ale -aless mi% mi% vari varian ance ce F P)+', B
-ale -aless quan quanti tity ty vari varian ance ce = P2+,, "
25-11
-ale -aless volu volume me vari varian ance ce P3+) B
Chapter 25 Managing Productivity Productivi ty and Marketing Effectiveness Degular &otal
P'+,) " P1+)2 B
P3+2' " P)+12 "
P,+1 " P'+( "
Requirement Requirement 6 $arket si/e variances. 7-ee below.9 below.9 Requirement Requirement 3 $arket share variances 7 omitted. omitted. -ee below. below.99 5eighted average budgeted contribution margin per unit 5eighted $aster budget total contribution margin P3+) $aster budget total sales units ) ÷ 5eighted 5e ightedaverag averagee budgeted budgeted contributio contribution n margin margin per unit P (1 +alculation for mar4et shares shares 8udg 8udget eted ed &otal tal sale saless in units units ) ÷ &otal &otal sales of the industry 1+( = .' Actual ual &otal sales in uni units *2 ÷ &otal &otal sales of the industry 1+) = .'( +alculation for variances variances Actual total market Actual total market % si/e % Actual market 8udgeted market share % Average share % Average budgeted contribution budgeted contribution margin per unit margin per unit 1+) % .'( % P(1 1+) % .' % P(1 = P3)+*2 = P32+)' $arket share variance = P'+, "
8udgeted total market si/e % 8udgeted market share % Average Average budgeted contribution margin per unit 1+( % .' % P(1 = P3+)
$arket si/e variance = P2+' "
-ales quantity variance = P'+, " F P2+' " = P)+12 "
Requirement Requirement 5 &he sum of market si/e variance and market share variance and verification that this total equals the sales quantity variance. &otal otal mark market et si/ si/ee var varia ianc ncee F &otal otal mark market et shar sharee var varia ianc ncee = P2+' " P'+, "
Problem ( Pro!u#ti$it% an! Ethi#s& 25-12
&otal otal qua quanti ntity ty varia varianc ncee P)+12 "
Managing Productivit y and Marketing Effectiveness Chapter 25
Requirement Requirement 1 &he operational partial productivity deteriorates slightly from .(1 in 2( 7(+ 7(+9 9 to .( in 2) 7()112+ 7()112+9. 9. $anipul $anipulatin ating g account accountin ing g numbers in order to show a desirable result is an unethical behavior regardless the intention.
Requirement Requirement 2 &an should not follow the order without following a consistent accounting method. method. If the firm believes believes that certain cost items items should be reclassified reclassified as indire indirect ct costs+ costs+ the same same procedu procedure re should should be follow followed ed for all years. &an &an should then go back and revise operating results of previous years. Problem 5 Small 4usiness Maret Si6e an! Share arian#es&
Requirement Requirement 1 udget
5!#
mpress’ mpress’ %esigns ( 2(
-ndustry ( 2
/ctual .hare 1.C 12.(C
mpress’ mpress’ %esigns '( 3(
-ndustry '2( 1(
.hare '('2( 3(1(
Requirement Requirement 2 7eighted /verage udgeted +ontribution &argin Per Unit) 7( welcome welcome signs % P29 F 72( doghouses doghouses % P(.29 P(.2 9 *( = P3.* &ar4et .hare a ariance 5elcome 5e lcome -igns 7'('2( @ .19 % '2( % P3.* = P*.), P*.) , " !oghouses !oghouses 73(1( @ 2(29 % 1( % P3.* = P'., " Requirement Requirement ! &ar4et .i8e a ariance 5elcome 5e lcome -igns 7'( @ (9 % (( % P3.* = P23.3 P23. 3 B !oghouses !oghouses 71( @ 29 % 2(2 % P3.* = P1.1 B 25-1'
Chapter 25 Managing Productivity Productivi ty and Marketing Effectiveness
Requirement Requirement $ Among possible reasons are quality changes+ pricing changes+ less producers due to seasonal variations+ and market no longer there.
Requirement Requirement Amon Among g alternat alternativ ives es are improv improving ing costs costs through through adopti adopting ng activit activity y based based costing+ making different signs+ using less e%pensive wood+ finding competitive advantage. III. Multiple Choice Questions 1. 2. 3. '. (. ). *. ,. . 1.
A : 8 ! A : : 8 : !
11. 12. 13. 1'. 1(. 1). 1*. 1,. 1. 2.
A 8 A 8 : ! 8 : A !
21. 22. 23. 2'.
A ! : !
Supporting Computations:
Operational partial productivity productivity
G'( !irect labor
÷
2( Input Desource Partial Bsed Productivity *(+ = 37
÷
2) Input Desource Partial Bsed Productivity ,+) = 3701('
1& )+
÷
1+ =
/73
)'+
÷
2&
#inancial partial productivity productivity 25-1(
1+,'* =
57332
Managing Productivit y and Marketing Effectiveness Chapter 25
2(
G'( !irect labor
Bnits of
:ost of Input Desource Partial Bsed Productivity P('+ + = 371111 ÷ P('
Bnits of
÷
2) :ost of Input Desource Partial Bsed Productivity P) P)+2 +2, , = 371353
'& )+
÷
3+ 3+ =
372
"otal productivity in units 7a9 &otal units manufactured 7b9 7b9 &otal variable variable manufactur manufacturing ing costs costs incurred 7c9 &otal produc productiv tivity ity 7a9 7a9 ÷ 7b9 7d9 !ecrease in productivity
)'+
÷
P3'* P3'*+1 +1' ' =
(& 2( )+
371((
2) )'+
P,'+ P()+3,' 3730 37301( 1(2 2 5& 5& .))1 .*1'2 @ .))1 = 3733(51 /&
"otal productivity in sales pesos 7a9 &otal sales 7b9 7b9 &otal variable variable manufactur manufacturing ing costs costs incurred 7c9 &otal produc productiv tivity ity 7a9 7a9 ÷ 7b9 7d9 !ecrease in productivity
2( P1+(+
2) P1+)+
P,'+ P170 17050 50 5& 5& P1.*,(* @ P1.)*3 =
P()+3,' P1.)*3 P371120 /&
productivity 0& Operational partial productivity
=
Actual Production Actual Input
=
+( ,+(
= 173/
& #inancial partial productivity productivity
719
200 '+
2006 ',)+
1) % P3+3*( P('+
1, % P3+12( P()2+(
.*'*
37/(
1+ % P2) P2)+
13+( % P2( P33*+(
Chapter 25 Managing Productivity Productivi ty and Marketing Effectiveness
productivity productivity 719 7'9 7'9
1.(3,(
1.''
200 '+
2006 ',)+
P('+ 2)+ P,+ 375
P()2+( 33*+( P+ .('
& &otal productivity
719
Actual 8udget 1. 2. 3.
#irm 1+ +
"otal "otal &ar4et 2++ = 1+(+ =
&ar4et .hare (C )C
$arke $arkett si/ si/ee varia varianc nce e 72+ 72++ + @ 1+( 1+(+ + 9 9 % .) .) % P, = P2(3.33 P2(3.333 3 " 13& 13& $arket share variance 7(C )C9 % 2++ % P, = P1/3.33 P1/3.333 3 U 11& 11& -ales quantity variance 71 71+ @ +9 % P, = P 3.333 3.333 " 12& 12&
1'& 8udgeted sales unit 8udgeted contribution margin per unit 8udgeted to total co contribution ma margin 8udgeted average contribution margin per unit
Product Product / 3+
Product )+
"otal "otal +
% P'. P12+
% P1. P)+
P*2+ P733
1(& Actual units sold 8udgets sales unit !ifferences in sales units 8udgeted contribution margin per unit -ales volume contribution margin variance
Product Product / 3(+ @ 3+ (+
Product )(+ @ )+ (+
%
% P1.
P'. P2+ "
25-1/
P(+ "
"otal "otal
P03.333 "
Managing Productivit y and Marketing Effectiveness Chapter 25
-ales mi%es
Product A Product 8 &<&A?
8udgeted Bnit C 3+ 13 )+ 23 + 1
Actual Bnit 3(+ )(+ 1+
C 3( )( 1
15&-ales mi% contribution margin variance Product A 7.3( @ 139 % 1+ % P' = Product 8 7.)( @ 239 % 1+ % P1 = &otal sales mi% contribution margin variance
P /.//0 " 1/.//0 U P1+ B
1/&-ales quantity contribution margin variance Product A A 71+ @ +9 % 13 % P' = Product 8 71+ @ +9 % 23 % P1 = &otal tal sale saless quan quanttity ity con contrib tribut utio ion n marg argin vari varian ance ce
P1'.''' " //.//0 " P,+ P,+ "
10&5e 5eighted ighted average budget contribution margin per unit P,. 7calculated in no. 139 $arket si/e contribution margin variance 72++ @ 1+(+9 % + 1+(+ % P, = P2(3.333 " 1&$arket share contribution margin variance 71+ 2++ @ + 1+(+9 % 2++ % P, = P1/3.333 U 1&"le%ible budget contribution margin variance
Product A Product 8 &<&A?
&otal :ontribution margin Actual
23&&otal contribution margin price variance 7given9 -ales price variance 25-10
"le%ible 8udget :ontribution $argin >ariance P 3(+ B P13+ " P 5.333 "
P(+ "
Chapter 25 Managing Productivity Productivi ty and Marketing Effectiveness
Product A 7 P1 P12 @ P19 % 3(+ = Product 8 7P2' @ P2(9 % )(+ = &otal sales price variance &otal variable cost price variance
P*+ " P)(+ B
21&&otal &otal fle%ible fle%ible budget budget contribution contribution margin margin variance &otal contribution margin price variance 7given9 &otal variance cost efficiency variance
@ (+ " P(5.3 (5.333 33 " P(+ " (+ " P(5.3 (5.333 33 "
22&-ales mi% ratio D)) D1 &<&A?
/ctual 9uantity 1+ 1+ 2+
Ratio .( .( 1.
udget 9uantity Ratio 1+2 .*( ' .2( 1+) 1.
D)) sales quantity quantity variance variance 72+ @ 1+)9 % .*( % P1 = P'.333 " mi% variance variance 7.( @ .2(9 % 2+ % P* = P'5.333 " 2'&D1 sales mi% 2(&&otal sales volume variance
D)) D1 &otal
71+ @ 1+29 % P1 = 71+ @ '9 % P* =
25-1
P 2+ B '2+ " P(3.3 (3.333 33 "