Sales Price, Industry Volume, and Mix Variances: Oversea Airlines plans its budget and subsequently evaluates sales performance
Question:
Sales Price, Industry Volume, and Mix Variances: Oversea Airlines plans its budget and subsequently evaluates sales performance based on "passenger-miles." A passenger-mile is one paying passenger flying one mile. For this month, the company estimated its contribution margin would amount to 20 cents per passenger-mile and that 40 million passenger-miles would be flown. As a result of improvement in the economy, 43 million passenger-miles were flown this month. The price per passenger-mile averaged 30.3 cents. The budgeted variable cost per mile was 10 cents. Subsequent analysis by management indicated that the industry flew 7 percent more passenger-miles this month than expected.
Required: Compute the price, industry volume, and market share effects on company revenues for the month.
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