Deck 16: Operational Performance Measurement: Further Analysis of Productivity and Sales

Question 1

"Partial productivity measures should be calculated only for high-value-added activities." Do you agree

Answer 1

Productivity basically means the ratio between the output and the input. It is concerned with the use of both labor and capital in such a manner to get maximum output at best of resources. It also measures the efficiency of the production in terms of the output per unit of input in a specified period of time.
Partial productivity
It focus on the relationship between the input factors to the output which is obtained. This clearly indicates that relation exist between the factor which is input and the output which is obtained. These are the various examples for the partial productivity:
-Direct material productivity in which output is divided by the units of the material
-Workforce productivity in which output per person employed or output per labor hour employed is measured, it means number of labor employed is considered.
-Process productivity in which output per machine hour or the output per kilowatt hour is measured, it means number of machine hour is employed is taken to be considered.
Yes it is true to say that partial productivity refers to one of the measurement solutions which do not meet the requirement of the total productivity that is some of the high value added activities are concerned with the partial productivity and the total productivity is yet to help under this type of solutions. These are the various solutions for the partial productivity implied like
Single factor productivity,
Value added productivity,
Unit cost accounting,
Efficiency ratios and
Management control ratio system.
For the small business it may concerns only to analysis the one factor and its impact in detail rather than all the factor. So there is need for the partial productivity with particular relates to the activities which are concerned with high value added. It relates to the:
-Labor productivity that is output per hour worked, this clear indicates that how much hour spend in obtained output.
-Capital productivity that is output per unit of capital, this indicates that how much output obtained at per unit of capital.
-Energy productivity that is output per joule of energy used, this shows that what's the cost of per unit of output by spending energy that is electricity bill correlates with the output of the organization for the particular period and made decision accordingly.
Hence, it is observed that partial productivity is the key measurement for the small businesses in order to take decision regarding the high value added activities, so that company make planning as per the analysis. For that ratio of the output to the input is measured and take decision.

Question 2

What is the total sales volume variance
a. $10,000F
b. $12,400F
c. $13,000F
d. $22,000F
e. $40,000F

Answer 2

Flexible budget:
Flexible budget mean budget that is prepared for various level of outputs, thereby allowing analyst the analyse the revenue, cost and profit at various level of outputs. Flexible budget helps in analysing sales by enabling management to compare the actual sales with various budgets prepared as a part of flexible budget. Further, it allows analysis of productivity by helping management to identify the important drivers of productivity and change in their values with the change in underlying sales.
Discussion and analysis:
Since option (e) is correct, option (a) cannot be correct.
Thus, option (a) is incorrect.
Since option (e) is correct, option (b) cannot be correct.
Thus, option (b) is incorrect.
Since option (e) is correct, option (c) cannot be correct.
Thus, option (c) is incorrect.
Since option (e) is correct, option (d) cannot be correct.
Thus, option (d) is incorrect.
Computation of total sales volume variance i.e. of both the products.
Sales volume variance is calculated as-
Therefore, total sales volume variance is $40,000 F
Thus, option (e) is correct.

Question 3

Sales Variances; Quarter to Quarter Hathaway Products, Inc., produces an innovative lighting system used in restaurants and high-end retail stores to provide a pleasing, warm atmosphere. Hathaway produces two versions of the product, called Starlight and Moonlight. Sales management at Hathaway wants to complete a sales performance analysis and has collected the following information for the first quarter (Qtr. 1) and the second quarter (Qtr. 2) of the current fiscal year.

1. Calculate a flexible budget contribution income statement for Qtr. 2, showing the Qtr. 2 results, the Qtr. 1 results, and the flexible budget. Use Exhibit 16.15 as a guide.
2. Calculate the volume variances for each product based both on sales dollars and contribution margin.
3. Determine the sales volume variance, the sales mix variance, and the sales quantity variance for each product, based on contribution margin.
EXHIBIT 16.15 Selling Price and Volume Variances for January 2017

Answer 3

Flexible Budget: Flexible Budget is a variable budget that is created for the future on the basis of the current scenario. It focusses on projecting the future revenue and expenses for the future production levels of the organization based on the current level of production output, expenses and revenue.
1.
The Flexible Budget Contribution Income Statement is calculated as given below:
Therefore the Operating Income for Quarter 2 is
2.
Therefore HP Inc's Volume Variance Based on Sales Dollars is
and Volume Variance based on Contribution Margin is
3.

Question 4

Comparative Income Statements and Sales Performance Variances; Current to Prior Year Clippers Inc. (CI) manufactures two types of garden clippers. A light duty model called the "half-inch" is intended for clipping branches and stems up to one-half inch thick. The "one-inch" model is designed for heavier stems and branches. To boost sales, CI decided at the beginning of the current year to reduce the price of the half-inch model to better position its price relative to some key competitors. On the other hand, CI felt that the one-inch model was technically superior to competitors' models and decided that a small price increase was appropriate. The data for the current and prior year are as follows:

Required
1. Calculate a comparative contribution income statement for CI for the current year that shows the volume and selling price variances for each product based on contribution margin. (Hint: Use Exhibit 16.15 as an example.)
2. Determine the sales mix variance and the sales quantity variance for each product, based on contribution margin.
3. Did the price change have the expected results Why or why not
EXHIBIT 16.15 Selling Price and Volume Variances for January 2017

Question 5

Why do manufacturing personnel prefer operational productivity measures to financial productivity measures

Question 6

What is the R66 sales quantity variance
a. $400F
b. $1,000F
c. $1,200F
d. $3,000F
e. $3,600F
Use the following information for Brief Exercises 16-26 through 16-28. C. W. McCall sells a goldplated souvenir mug; McCall expects to sell 1,600 units for $45 each to earn a $25 contribution margin per unit. Janice McCall, president, expects the year's total market to be 32,000 units. For the year just completed, the local college won the national hockey championship, and as a result the total actual market was 100,000 units. C. W. McCall sells 3,000 units and calculates sales variances using contribution margin.

Question 7

Partial Operational Productivity Ashley Technology Inc. manufactures a scrambling device for cellular telephones. The device's main component is a delicate part, CT140. CT140 is easily damaged and requires careful handling. Once damaged, it must be discarded. The firm hires only skilled laborers to manufacture and install CT140; however, some are still damaged. Robotic instruments process all other parts. Ashley's operating data for 2015 and 2016 is as follows:

Required
1. Compute the partial operational productivity for 2015 and 2016.
2. On the basis of the partial operational productivity that you computed, what conclusions can you draw about the firm's productivity in 2016 relative to 2015

Question 8

Comparative Income Statements and Sales Performance Variances; Current to Prior Year Green Grow Inc. manufactures riding lawn mowers that it sells to the large discount stores such as Walmart, Lowes, and Home Depot. The mowers are marketed as a "value" product, with good quality at a very good price. The company's two products are the Quality mower, which last year sold for $1,200 (the discounters retailed it for $1,500), and the Heavy Duty model, which Green Grow Inc. sold for $1,600 (and was retailed for $2,200). At the end of last year, the company had come under increased price competition from other manufacturers. The company believes it must reduce its price in the current year on both products to keep its current market share with sales of 3,500 units. The unit variable costs for the Quality and Heavy Duty products are $800 and $950, respectively. Management does not believe it can reduce these variable costs for the coming year but will begin to study ways to do so for future years. In the meantime, the company management believes it can maintain its total market share by increasing its advertising expenses by $150,000 and cutting the price on both models by 10%. Fixed costs, including advertising, were $550,000 last year and are not expected to change, with the exception of the increase in advertising. Last year, the sales mix was 40% for Quality and 60% for Heavy Duty. In the current year, the sales mix is 50% for Quality and 50% for Heavy Duty.
Required
1. Calculate a comparative contribution income statement for Green Grow Inc. for the current year, that shows the volume and selling price variances for each product based on contribution margin. ( Hint: Use Exhibit 16.15 as an example.)
2. Determine the sales mix variance and the sales quantity variance for each product, based on contribution margin.
3. Did the price change and increase in advertising have the expected results Why or why not
4. What methods should Green Grow Inc. adopt to become more competitive in the current and coming year
EXHIBIT 16.15 Selling Price and Volume Variances for January 2017

Question 9

"A productivity measure such as machine hour productivity is more important in a JIT environment than in a non-JIT environment." Do you agree

Question 10

What is the market size variance
a. $51,000F
b. $68,000F
c. $71,400F
d. $85,000F
e. $119,000F

Question 11

Partial Financial Productivity Use the data for Ashley Technology Inc. in Problem 16-41 to complete the requirements. (In your calculations, use 6 significant digits after the decimal point.)
Required
1. Compute the partial financial productivity ratios for 2015 and 2016.
2. On the basis of the partial financial productivity ratios you computed, what conclusions can you draw about the firm's productivity in 2016 relative to 2015
3. Separate the change of the partial financial productivity ratio from 2015 to 2016 into productivity changes, input price changes, and output changes.
4. Does the detailed information provided by separating the change of the partial financial productivity ratio offer any additional insight into the relative productivity for either 2015 or 2016

Question 12

Sales and Variable Cost Variances; Current to Prior Year; Review of Chapter 14 RJM Enterprises is a manufacturer of consumer electronics products. The industry is very competitive and RJM has seen its profits fall in recent years, including an operating loss of $18,585 last year. RJM was able to turn that around this year by aggressively cutting costs. The summarized financial results for RJM are shown below.

Jim Green, the management accountant at RJM, is analyzing the company's performance for this year, in order explain to management the specific aspects that drove the company to success. Some of the information Jim obtained is:

Assume that RJM, for efficiency and to reduce cost, maintains little or no materials or work-inprocess inventory.
Required
1. Determine the selling price variance for the current year based on sales dollars. Determine the volume variance based on contribution margin.
2. Determine the variable cost variances:
a. The usage and price variances for materials.
b. The usage and rate variances for labor.
3. Interpret your findings in requirements 1 and 2 above.

Question 13

Which of the following statements is true (a) The lower the partial productivity ratio, the greater the productivity, (b) productivity improves when partial productivity increases, (c) prices of inputs are incorporated in the partial operational productivity ratio, (d) the partial productivity ratio measures the number of outputs produced per multiple input, and (e) more than one of the above is true.

Question 14

What is the firm's sales volume variance
a. $35,000F
b. $49,000F
c. $51,000F
d. $85,000F
e. $135,000F

Question 15

Total Productivity Use the data for Ashley Technology Inc. in Problem 16-41 to complete the following requirements.
Required
1. Compute the total productivity ratios for 2015 and 2016.
2. On the basis of the total productivity that you computed, what conclusions can you draw about the firm's productivity in 2016 relative to 2015

Question 16

List important measures in assessing marketing effectiveness.

Question 17

What is the market share variance
a. $8,000U
b. $11,200U
c. $40,000U
d. $50,000U
e. $70,000U

Question 18

Partial Operational and Financial Productivity In the fourth quarter of last year, Colditz Company embarked on a major effort to improve productivity. It redesigned products, reengineered manufacturing processes, and offered productivity improvement courses. The effort was completed in the last quarter of the current year. The controller's office has gathered the following year-end data to assess the results of this effort.

Required In your calculations, use 6 significant digits after the decimal point.
1. Prepare a summary contribution approach income statement for each of the two years and calculate the change in operating income.
2. Compute the partial operational productivity ratios for each production factor in each year.
3. Compute the partial financial productivity ratios for each production factor in each year.
4. On the basis of the partial operational and financial productivity ratios computed in (2) and (3), what conclusions can you make about the firm's productivity last year relative to the current year
5. Separate the changes in the partial financial productivity ratio from the prior year to the current year into productivity changes, input price changes, and output changes.
6. Consider the changes calculated in requirement 5. Does this detailed information offer any additional insight into the relative productivity of Colditz for the prior year and the current year

Question 19

What are the components of the sales variance

Question 20

Productivity and Strategy; Manufacturing To maintain profit growth, several manufacturing companies have responded to the recession by cutting jobs. Harley-Davidson reduced its workforce by 1,400 in 2010 and by an additional 1,600 in 2011. As sales have declined, the company has reduced labor capacity at many plants. The same is true at General Electric, Texas Instruments, Coca-Cola, and many other companies that have reduced capacity at certain plants, closed selected plants entirely, or dropped product lines. In many of these companies, the profits are held as cash, and the companies are holding off on making any new investments until economic conditions improve. Some analysts say the companies are just shrinking their operations to match the decline in expected future demand; the companies are profitable but smaller.
Required
1. Do the recent actions by these companies support their long-term strategies
2. How do the productivity gains at these companies affect profits in the short-term and long-term

Question 21

Partial Operational and Financial Productivity; Total Productivity Katrina Design has decided to experiment with two alternative manufacturing approaches, identified as MF and LI, for producing men's fashions. The firm expects the total demand to be 20,000 suits. Management estimates the required input resources using different manufacturing approaches are:

The cost of materials is $10 per yard; the cost of labor is $26 per hour.
Required In your calculations, use 4 significant digits after the decimal point.
1. Compute the partial operational productivity ratios for each of the production approaches. Which approach would you select based on the partial operational productivity ratios
2. Calculate the partial financial productivity ratios for each of the production approaches. Which approach would you select based on the partial financial productivity ratios
3. Compute the total productivity ratios for each of the production approaches. Which approach would you select based on the total productivity ratios

Question 22

Distinguish between a selling price variance and a sales volume variance.

Question 23

Productivity; Sustainability Telematics is a system of sensors installed on cars and trucks that provides current information on the status and operation of many of the vehicle's parts. It can be used to show the location of the vehicle, the oil level, the condition of the brake pads, whether all lights are working, and whether a seatbelt is buckled, among many other potential measures. United Parcel Service (UPS) uses telematics on nearly one-half of its 55,000-vehicle U.S. truck fleet.
Required
1. Describe what you think is UPS's strategy. Does telematics support UPS's strategy, and if so, how
2. How can telematics be used to improve productivity and sustainability at UPS

Question 24

Direct Labor Rate and Efficiency Variances; Productivity Measures; Review of Chapter 14 Textron Manufacturing Inc. assembles industrial testing instruments in two departments, assembly and testing. Operating data for the current and prior year follow:

The firm assembled and tested 20,000 instruments in both years.
Required In your productivity calculations, use 6 significant digits after the decimal point.
1. Calculate the direct labor rate and the efficiency variances for both departments in both years.
2. Calculate the direct labor partial operational productivity ratio for both departments in both years.
3. Calculate the partial financial productivity ratio for both departments in both years.
4. Compare your answers for requirements 2 and 3. Comment on the results.
5. How do productivity measures differ from variance analysis, in terms of the types of perspectives they offer for the firm's strategic decision making

Question 25

What is the difference between a sales quantity variance and a sales volume variance

Question 26

Productivity and Quality Improvement in Retail Most manufacturers have long adopted quality improvement techniques to reduce or eliminate errors, defects, and waste and speed the flow of product to the consumer. Many retailers are now following the lead. For example, Best Buy was able to save approximately $20 million through a quality improvement program that streamlined the installation of appliances. Target has also adopted quality improvement as a means of reducing waste and cost in its retail operations.
Required How does quality improvement as described above differ from productivity

Question 27

Productivity and Market Share in the Auto Industry; Internet Exercise The following data were obtained from the recent financial statements for two U.S. automakers (in millions of dollars).

Required
1. Calculate and interpret total productivity in dollars for the two automakers. Assume that total variable manufacturing costs are 80% of cost of goods sold for each automaker.
2. Go to the Internet for these companies and look under investor information to find the financial statements for each company. Review the sections on management's discussion and analysis and related financial statements and disclosures, and find the market size and market share information provided by these firms.
Ford: www.ford.com
GM: www.gm.com

Question 28

"As long as a firm sells more units than the units specified in the master budget, it will not have an unfavorable sales volume variance." Do you agree Why or why not

Question 29

Partial Financial Productivity and Total Productivity ABC Corporation makes small parts from steel alloy sheets. Management has the flexibility to substitute direct materials for direct manufacturing labor. If workers cut the steel carefully, more parts can be manufactured from a metal sheet, but this requires additional direct manufacturing labor hours. Alternatively, ABC can use fewer labor hours if it is willing to tolerate more waste of direct materials. ABC decided to improve materials productivity this year and the following provides information for the current and prior year:

Required Carry all computations to four digits after the decimal point.
1. Compute the partial financial productivity for both labor and materials for each of the two years.
2. Calculate ABC's total productivity in units per dollar in each of the two years.
3. Evaluate management's decision to improve materials productivity.

Question 30

Productivity and Ethics Janice Interiors installs custom interiors for luxury mobile homes. In its most recent negotiation with the union, the firm proposed to share productivity gains in direct labor equally with the union. In return, the union agreed not to demand wage increases. Most union members, however, are skeptical about management's honesty in calculating productivity measures. Nevertheless, union members voted to try the program. Kim Tomas, the management accountant responsible for determining productivity measures, collected these data at the end of the current year:

Steve Janice, the CEO, is very anxious to demonstrate the firm's good intentions by showing the labor union a positive result. He suggests to Kim that some of the direct labor hours are actually indirect. For example, some of the labor hours are indirect because these hours cannot be allocated to specific types of work. Following his suggestion, Kim reclassifies 12,000 hours as indirect labor.
Required
1. Evaluate whether Steve's suggestion to reclassify some of the direct labor hours as indirect labor is ethical.
2. Would it be ethical for Kim to modify her calculations

Question 31

What is productivity What does it measure

Question 32

What are the relationships among a selling price variance, a sales mix variance, a sales quantity variance, and a sales volume variance

Question 33

Partial Operational and Financial Productivity Software Solution (SOS) helps subscribers solve software problems. All transactions are made over the telephone. For the year 2015, 10 engineers, most of whom are recent graduates, handled 100,000 calls. The average yearly salary for software engineers was $45,000. Starting in 2016, the firm retained and hired only software engineers with at least two years of experience. SOS raised the engineers' salary to $60,000 per year. In 2016, eight engineers handled 108,000 calls.
Required
1. Calculate the partial operational productivity ratio for both years.
2. Calculate the partial financial productivity ratio for both years.
3. Did the firm make the right decision to hire only software engineers with at least two years' experience
4. List other factors that should be considered in making the decision.

Question 34

Partial Operational and Financial Productivity; Medical Practice Family Medical Care (FMC) is a family medical practice with 6 physicians and a nursing staff of 8 to 10 nurses and an administrative staff that varies from 4 to 7 personnel. Rajat Patel, the chief physician at FMC, is interested in studying the efficiency of the practice as a basis to set some benchmarks for further improvement, for rewarding his staff, and for comparing the efficiency of the FMC practice to other family medical practices. He is able to get comparable data for other practices from industry sources. So that the data are consistent with the industry sources, Patel has asked Marin Associates, his accounting firm, to develop a set of productivity measures that would satisfy this requirement. Upon investigation, Joseph Marin finds that the measures to be used are the partial financial and operational productivity measures as defined in the chapter. The following information is for the last two years for the FMC practice:

Required In your calculations, use 6 significant digits after the decimal point.
1. Compute the partial financial productivity ratios for nursing and administrative support for the current and prior year.
2. Separate the change of the partial financial productivity ratio from the prior year to the current year into productivity changes, input price changes, and output changes.
3. Write a brief memo from Joseph Marin to Rajat Patel interpreting the findings above.

Question 35

Discuss why improving productivity is important for a firm that competes on a cost leadership strategy.

Question 36

Distinguish between market size variance and market share variance.

Question 37

Productivity: Which Way to Lean Lean manufacturing is what a lot of manufacturing firms are after these days. This means a renewed focus on productivity and profitability, particularly for firms that compete on a cost leadership strategy and are facing increased global low-cost competition. Adopting the right accounting approach to facilitate improvements in productivity is critical for these companies. Companies like Whirlpool, Pratt-Whitney (a unit of United Technologies), General Electric, and many other manufacturers are adopting the methods of lean manufacturing.
Required
1. How can productivity measures described in this chapter help a company to achieve lean manufacturing
2. The founding principles of lean manufacturing are based in part on the Toyota Production System. Explain the Toyota Production System and list its four main elements.

Question 38

Sales Variances; Flexible-Budget Variance; Review of Chapter 14 Robinson Company has two products, A and B. Robinson's budget for August follows:

On September 1, these operating results for August were reported:

Required
1. For each product, determine the following variances measured in contribution margin:
a. Flexible-budget variance.
b. Sales volume variance.
c. Sales quantity variance.
d. Sales mix variance.
2. Explain the amount of the flexible-budget variance using the amounts of the selling price and variable cost variances.

Question 39

List benchmarks or criteria often used in assessing productivity, and discuss their advantages and disadvantages.

Question 40

"A favorable sales quantity variance indicates that the marketing manager has done a good job." Do you agree Can you give an example in which a market size variance or market share variance is opposite to that of the sales quantity variance

Question 41

Quality and Productivity Each summer the Harbour Report (www.oliverwyman.com/ow/automotive.htm) rates the productivity of the major automakers, including the Detroit Big 3, Toyota, Honda, and many other brands. The report is closely watched as a barometer of the future profitability of the firms. However, some have argued that the productivity reports are insufficient. For example, a company can temporarily raise its productivity by laying off or "buying out" employees. Also, some would argue that the focus on productivity fails to draw attention to other key strategic factors such as quality, design, and customer service. For example, the J.D. Power organization ( www.jdpower.com/autos ) rates the initial quality of many new cars.
Required What do you think are the priorities for the auto companies: quality, productivity, customer service, design, or some other key strategic success factor Briefly explain your answer.

Question 42

Sales Variances; Flexible-Budget Variance; Review of Chapter 14 Jay Banning, CEO and a major stockholder of Banning Inc., was unhappy with its operating results for the past year. The company manufactures two environmentally friendly industrial cleaning machines used primarily in automobile repair shops, gas stations, and auto dealerships. The master budget and operating results of the year (000s omitted except for the selling price per unit) follow:

1. Compute the contribution margin flexible-budget variance, contribution margin sales volume variance, contribution margin sales quantity variance, and contribution margin sales mix variance for each product and for the firm.
2. Write a memo to Jay Banning about the implications of the variances that you just computed on the firm's strategy, planning, and operational control.

Question 43

What is operational productivity Financial productivity

Question 44

What are the relationships between market size variance, market share variance, sales quantity variance, and sales volume variance

Question 45

Productivity and the Economy The U.S. Bureau of Labor Statistics (www.bls.gov) provides quarterly data for productivity in business, nonfarm business, and manufacturing industries. The Bureau of Labor Statistics also breaks down these data into industry segments. The data for the annual percentage change in productivity for the recent decade is as follows, for the category of business productivity. Capital expenditure data are maintained by the Census Bureau, www.census.gov.

Required Economists argue that the changes in productivity are influenced by changes in the economy, for example, the economic downturn of 2000-2001 as well as the recent recession which started in 2008. Others argue that productivity is most affected by advances in and adoption of information technology, investments in research and development, and capital investment in new plant and equipment (i.e., more highly automated and efficient manufacturing facilities). The preceding data show that productivity was on the decline in the period 2005-2008 and improved again in 2009. In 2009, capital investment was sluggish as was the pace of innovation and adoption of information technology. Based on the preceding information and the data from the Census Bureau, what productivity change would you forecast for 2010 and the following couple of years

Question 46

Sales Volume, Sales Quantity, and Sales Mix Variances Margot's Ice Cream operates several stores in a major metropolitan city and its suburbs. Its budget and operating data for the current year follow:

Required Round all calculations to four decimal places after the decimal point.
1. Compute these variances for the individual flavors and total sold:
a. Sales volume.
b. Sales mix. Extend the sales mix calculation to five decimal places.
c. Sales quantity.
2. Assess sales in the current year based on your analyses.

Question 47

What is partial productivity Total productivity

Question 48

"An improvement in earnings growth can be achieved at the expense of market share (an unfavorable market share variance)." Do you agree

Question 49

Alternative Measures of Productivity A common measure of productivity, as explained in this chapter and as used by many business and trade organizations, including the U.S. Bureau of Labor Statistics, is the ratio of output to input, where input is typically measured in units of materials, labor hours, or related measures. An alternative is to use the ratio of capacity available to capacity utilized. For example, the amount of capacity in the U.S. manufacturing industries has almost doubled over the last two decades. However, the rate of capacity utilization (output/capacity available) has fallen slightly over this period of time, with a steep drop in 2009 followed by slow increases in 2010 and 2011. Some would say that this measure gives a better picture of productivity than the one we have used in the chapter.
Required Compare the measure of productivity based on capacity utilization with the measure used in the chapter. Which measure do you think is most useful for assessing the state of the manufacturing sector of the economy Explain briefly.

Question 50

Market Size and Share Variances Transpacific Airlines (TPA) budgeted 80 million passenger-miles, or 5% of the total market for the year just completed, at a contribution margin of 40 cents per mile. The budgeted average price was 52 cents per passenger mile.
The operating data for the year show that TPA flew 69.12 million passenger-miles with an average price of 48 cents per passenger-mile. The terrorist activity in the early part of the year in several countries in the region decreased the total miles flown by all airlines for the year by 10%. There is no flexible-budget variance for all costs.
Required
1. Assess the effects of price, sales volume, market size, and market share on the firm's operating results for the year.
2. Explain the risks posed by the global economic environment for TPA, and suggest strategies for mitigating those risks.

Question 51

"A financial productivity measure contains more information than an operational productivity measure does." Do you agree

Question 52

"Darwin, Inc., provided the following information:

What is the partial operational productivity ratio

A) 0.97 unit per gallon.
B) 1.02 units per gallon.
C) 1.06 units per gallon.
D) 1.12 units per gallon.
E) None of the above.
Use the following information for Brief Exercises 16-23 through 16-25. CompuWorld sells two products, R66 and R100, and calculates sales variances using contribution margin. Pertinent data for the current year follow:

Question 53

Productivity Measures for Call Centers Our examples in the chapter have focused on manufacturing, where the output is units of product and the inputs are manufacturing activities or costs. The concept of productivity can be applied in a variety of settings, wherever there are inputs and outputs. For example, consider the call center for a cell phone company. Suppose the call center operates 24 hours a day every day of the week to respond to user problems and questions. To calculate productivity for the call center, we could divide the total number of calls over a period of time by the number of hours or the number of employees in the call center during that period.
Required Evaluate the productivity measure identified above for the call center. Identify some alternative measures of productivity for the call center and explain your choices.

Question 54

Market Size and Market Share Variances for Small Business Diane's Designs is a small business run out of its owner's house. For the past six months, the company has been selling two products, a welcome sign and a birdhouse. The owner has been concerned about the company's marketing effectiveness. The master budget and actual results for March of this year follow:

The total market for welcome signs for the last six months was 3,000 budgeted and 3,000 actual. Diane expected the total market for birdhouses to be 200 units per month; the actual volume for the entire market, however, turned out to be only 175 units per month.
Required Round all calculations to four decimal places after the decimal point.
1. Compare Diane's Designs' market share for welcome signs and birdhouses.
2. What is the market share contribution margin variance
3. What is the market size contribution margin variance
4. Explain possible reasons for these variances.

Question 55

"A total productivity measure encompasses all partial productivity measures." Do you agree

Question 56

What is the R100 sales mix variance
a. $20,000F
b. $30,000F
c. $35,000F
d. $40,000F
e. $70,000F

Question 57

Sales Volume, Sales Quantity, and Sales Mix Variances The Greensboro Performing Arts Center (GPAC) has a total capacity of 7,500 seats: 2,000 center seats, 2,500 side seats, and 3,000 balcony seats. The budgeted and actual tickets sold for a Broadway musical show are as follows:

The actual ticket prices are the same as those budgeted. Once a show has been booked, the total cost does not vary with the total attendance.
Required Compute the following for the show (calculate sales mix percentage and unit contribution margin to four decimal places and round the variances to the nearest whole dollar):
1. The budgeted and actual sales mix percentages for different types of seats.
2. The budgeted average contribution margin per seat. Assume the ticket price is also the contribution margin.
3. The total sales quantity variance and the total sales mix variance.
4. The total sales volume variance.

Question 58

Market Size and Market Share Variances; Foreign Currency Fluctuations Tall Pines Brewery (TPB) makes two specialty beers in its microbrewery: Golden Ale and Dark Ale. Both beers sell for the same price per case in the U.S. market and in the export market. The latter market is primarily European countries. Both beers also have the same variable production costs, though the export product has slightly higher variable costs due to shipping and other distribution costs associated with the export beers. The price, cost, and market information for the two beers are shown below.

The budget was prepared with the expectation that the currency exchange rate would be $1.29 per euro. The actual average exchange rate for the period reflected the falling dollar, at $1.42 per euro.
Required Round all calculations to four decimal places after the decimal point.
1. What is the market share variance
2. What is the market size variance
3. Explain possible reasons for these variances, including a consideration of the effect of the change in the currency exchange rate for the dollar and the euro.