Assume you are the marketing manager for Smith Ltd in exercise 22.14, and the accountant explains that when the actual results were compared with budget results he found a favourable sales price variance, an unfavourable sales volume variance and an unfavourable variable expense variance.

Required

(a) For which of these three variances would it be reasonable for the accountant to expect you, as marketing manager, to take responsibility?

(b) Explain what could have caused the sales price variance, the sales volume variance and the variable expense variance.

Exercise 22.14

Smith Ltd has prepared the following information showing the actual contribution margin earned from the sale of its only product, and the planned contribution margin.