MARKET SIZE, SHARE, PRICE AND VARIABLE COST FOR EACH PRODUCT AND IN TOTAL Key causal factors Plan Actual Total market Expected Actual Actual Actual Actual Market share Expected Expected Actual Actual Actual Selling price Expected Expected Expected Actual Actual Variable costs Expected Expected Expected Expected Actual Electric meters Sales $ 2,400,000 $ 1,950,000 1,950,000 $ 1,885,000 $ 1,885,000 Variable costs 1,280,000 1,040,000 1,040,000 1,040,000 1,105,000 Contribution $ 1,120,000 910,000 910,000 845,000 780,000 Market size Market share Sales price Variable costs - $ 210,000 $ -$ 65,000 -$ 65,000 Electric instruments Sales $ 3,750,000 $ 5,437,500 $ 4,350,000 $ 4,437,000 $ 4,437,000 Variable costs $ 1,375,000 $ 1,993,750 1,595,000 $ 1,595,000 1,653,000 Contribution 2,375,000 3,443,750 $ 2,755,000 2,842,000 $ 2,784,000 Market size Market share Sales price Variable costs $ 1,068,750 -$ 688,750 $ 87,000 -$ 58,000 Total Sales $ 6,150,000 7,387,500 6,300,000 $ 6,322,000 $ 6,322,000 Variable costs 2,655,000 $ 3,033,750 $ 2,635,000 $ 2,635,000 $ 2,758,000 Contribution $ 3,495,000 $ 4,353,750 $ 3,665,000 $ 3,687,000 3,564,000 Market size Market share Sales price Variable costs Check $ 858,750 -$ 688,750 $ 22,000 -$ 123,000 $ 69,000 Fixed costs Manufacturing 1,388,000 1,399,000 -$ 11,000 Selling 250,000 245,000 5,000 Administration 320,000 325,000 5,000 R&D 318,000 325,000 7,000 Profit 1,219,000 1,270,000 51,000 Electric Meters data Total market Share Volume Price Var. costs Budget 800,000 10% 80,000 EA EA 30.00 $ 16.00 Actual 650,000 10% 65,000 29.00 $ 17.00 Electric Instruments data Total market Share Volume Price Var. costs Budget 250,000 10% 25,000 150.00 $ 55.00 Actual 362,500 8% 29,000 153.00 $ 57.00MARKET SIZE, MARKET SHARE, SALES MIX, PRICE AND VARIABLE COST VARIANCES FOR EACH PRODUCT AND IN TOTAL Key causal factors Plan Actual Total marke Expected Actual Actual Actual Actual Actual Market share Expected Expected Actual Actual Actual Actual Sales mix Expected Expected Expected Actual Actual Actual Selling price Expected Expected Expected Expected Actual Actua Variable costs Expected Expected Expected Expected Expected Actua Electric meters Sales 4,685,714 $ 3,807,143 $ 3,807,143 1,950,000 1,885,000 1,885,000 Variable costs $ 2,022,857 1,643,571 1,643,571 1,040,000 1,040,000 1, 105,000 Contribution $ 2,662,857 2,163,571 $ 2,163,571 910,000 845,000 780,000 Market size Market share Sales mix Sales price Variable costs -$ 499,286 -$ 1,253,571 -$ 65,000 -$ $5,000 Electric instruments Sales 1,464,286 $ 2,123,214 1,698,571 $ 4,350,000 $ 4,437,000 $ 4,437,000 Variable costs 632, 143 916,607 733,286 1,595,000 $ 1,595,000 1,653,000 Contribution 832, 143 1,206,607 965,286 $ 2,755,000 $ 2,842,000 2,784,000 Market size Market share Sales mix Sales price Variable costs $ 374,464 -$ 241,321 1,789,714 $ 87,000 -$ 58,000 Total Sales $ 6,150,000 $ 5,930,357 $ 5,505,714 $ 6,300,000 $ 6,322,000 $ 6,322,000 Variable costs $ 2,655,000 2,560, 179 2,376,857 2,635,000 $ 2,635,000 2,758,000 Contribution 3,495,000 $ 3,370, 179 $ 3,128,857 3,665,000 $ 3,687,000 3,564,000 Market size Market share Sales mix Sales price Variable costs Check -$ 124,821 -$ 241,321 $ 536,143 $ 22,000 -$ 23,000 $ 69,000 Fixed costs Manufacturing 1,388,000 1,399,000 -$ 11,000 Selling 250,000 245,000 5,000 Administration 320,000 325,000 5,000 R&D 318,000 325,000 7,000 Profit $ 1,219,000 1,270,000 51,000 Budget data Total market Share Volume Price/unit Revenue Var. costs/unit Var. costs Contribunit Contribution Budget - EM 800,000 10% 80,000 30.00 $ 2,400,000 $ 16.00 $ 1,280,000 A EA 14.00 $ 1, 120,000 Budget - EI 250,000 10% 25,000 150.00 $ 3,750,000 55.00 $ 1,375,000 95.00 $ 2,375,000 Average 1,050,000 105,000 58.57 $ 6, 150,000 25.29 $ 2,655,000 33.29 $ 3,495,000 Actual data Total market Share Volume Price Revenue Var. costs/unit Var. costs Contribunit Contribution Actual - EM 650,000 10% 65,000 29.00 $ 1,885,000 12.00 $ 780,000 Actual - El 362,500 29,000 EA EA CA 17.00 $ 1, 105,000 8% 153.00 $ 4,437,000 $ 94,000 67.26 $ 6,322,000 At 57.00 $ 1,653,000 96.00 Average 29.34 $ 2,758,000 A EA EA $ 2,784,000 1,012,500 37.91 $ 3,564,000 NB While the figures in the first three columns above are based on average selling prices, average variable costs, and average contribution margin they have used the exact numbers found in the calculator (eg $6, 150,000 / 105,000 units = 58.57142857) rather than the figures rounded to 2 decimal places.Read the case The Kinkead Equipment Company Ltd and answer the questions given at the end of the case. KINKEAD LTD Kinkead has been a leading Australian rm since World War II in specialty instruments for measuring electric current characteristics (voltmeters, ohmmeters and ammeters). Kinkead's products are grouped into two main product lines of business for internal reporting purposes (electric meters and electronic instruments). Each line includes many separate products, which are averaged together for the purposes of this case. The electric meters (EM) and electronic instrument (El) products perform the same basic function for the customer (both are industrial measuring instruments) but they represent two different technologies. EM is the older, but still dominant technology. The El technology is new and still experimental. An analogy is the mechanical wrist-watch versus the digital watch. Results for the year Andrew Macgregor, Managing Director of Kinkead, glanced at the summary profit and loss statement for 19XX (Exhibit A) then tossed it to Doug Lee and looked out the window of his ofce overlooking the industrial skyline of western Sydney. \"As you can see Doug, we beat our overall turnover goal for the year, improved our trading margin a bit, and earned more prot than we had planned. Although our selling costs did seem to grow faster than our turnover, all things considered, I would say 1978 was a good year for the firm.\" Doug Lee, a recent graduate of a well-known business school, was serving a training period as executive assistant to Mr. Macgregor. He looked over the gures and nodded his agreement. \"Doug, I'd like you to prepare a short report for the managing committee meeting next week summarizing the key factors which account for the favourable overall prot variance of $51,000. That might not be much for a rm like ours, but it would still pay your salary for a while, wouldn't it\" he laughed. \"I think your about ready to make a presentation to the committee if you can pull together a good report". \"Check with the financial director's staff for any additional data you may need or want. Just remember to keep it on a commonsense level no high powered nancial double talk. How about giving me a draft to look at in a day or so?\" Doug smiled somewhat meekly as he rose to return to his ofce. \"I'll give it a try\" he said. His rst step was to gather the additional information shown in Exhibit B. Exhibit A Kinkead Ltd Preliminary operating results 15 January 19XX ($000s) Budget % of Actual % of 1 9XX turnover 19XX turnover Turnover 6.150 100 6,322 100 Contribution 3,495 56.8 3,564 56.4 Less other xed Expenses: Manufacturing 1.388 22.6 1,399 22.1 Selling 250 4.1 245 3.9 Administrative 320 5.2 325 5.1 Research 318 5.2 325 5.1 PROFIT 1,219 19.8 1,270 20.1 Summary for 19XX Budget Actual Variance Turnover 6.150 6.322 172F Expenses 4.931 5.052 121 U Profit before tax 1.219 1.270 51 F Remarks Good sales performance with some minor variances on selling, administration and R&D but overall performance was essentially on target with prot $51 K above budget. Exhibit B: Additional Information Electric Meters (EM) Electronic Instruments (El) Selling prices per unit Average standard price $30 $150 Average actual prices $29 $153 Product costs per unit Average standard variable mff cost $15 $40.00 Average actual variable mlf cost $16 $42.10 Average standard selling commission $ 1 $15.00 Average actual selling commission $ 1 $14.90 Volume information Units produced and sold - actual 65.000 29,000 Units produced and sold planned 80.000 25,000 Total industry turnover - actual $26m $36m Kinkead's share of the market (% of physical units) Planned 10% 10% Actual 10% 8% Fixed expenses at Kinkead ($0005) Fixed manufacturing expenses Fixed selling expenses Fixed administrative expenses Fixed research expenses Planned $1 .388 250 320 318 Actual $1 .399 245 325 325