Revenue Analysis Using Industry Data and Multiple Product Lines: Arsco Company makes three grades of indoor-outdoor carpets. Sales volume for the annual budget is determined by estimating the total market volume for indoor- outdoor carpet and then applying the company's prior year market share, adjusted for planned changes due to company programs for the coming year. Volume is apportioned between the three grades based upon the prior year's product mix. again adjusted for planned changes due to company programs for the coming year. Given below are the company budget and the results of operations for March.

Industry volume was estimated at 40.000 rolls for budgeting purposes. Actual industry volume for March was 38,000 rolls.

Required:

a. Prepare an analysis to show the effects of the sales price and sales activity variances.

b. Break down the sales activity variance into the parts caused by industry volume and market share.

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Budget Sales-units (000 omitted) Grade 1 Grade 2 Grade 3 Total 1,000 rolls 1,000 rolls 2,000 rolls 4,000 rolls Sales-dollars (in thousands) $1,000 Variable costs 700 $2,000 1,600 $3,000 2,300 $6,000 4,600 Contribution margin 300 400 700 1,400 Manufacturing fixed cost 200 200 300 700 Product margin $ 100 $ 200 $ 400 700 Marketing and administrative costs (all fixed) Operating profit 250 $ 450 Actual Sales-units (000 omitted) 800 rolls Sales-dollars (in thousands) $ 810 1,000 rolls $2,000 2,100 rolls 3,900 rolls $3,000 $5,810 Variable costs 560 1,610 2,320 4,490 Contribution margin 250 390 680 1,320 Manufacturing fixed cost 210 220 315 745 Product margin $ 40 $ 170 $ 365 575 Marketing and administrative costs (all fixed) Operating profit 275 $ 300