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Peninsula Candy Company makes three types of candy bars: Chewy, Chunky, and Choco-Lite (Lite). Sales volume for the annual budget is determined by estimating the
Peninsula Candy Company makes three types of candy bars: Chewy, Chunky, and Choco-Lite (Lite). Sales volume for the annual budget is determined by estimating the total market volume for candy bars 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 among the three bars based on the prior year's product mix, again adjusted for planned changes for the coming year. The following are the company budget and the results of operations for July. Budget Sales-units (in thousands) Sales-dollars (in thousands) Variable costs Contribution margin Manufacturing fixed cost Product margin Marketing and administrative costs (all fixed) Operating profit Chewy 2,000 bars $220 160 $ 60 45 Chunky 2,000 bars $440 380 $ 60 34 $ 26 Choco-Lite 4,000 bars $720 560 $160 58 $102 Total 8,000 bars $1,380 1,100 $ 280 137 $ 143 60 $ 15 $ 83 Chunky 2,000 bars Actual Sales-units (in thousands) Sales-dollars (in thousands) Variable costs Contribution margin Manufacturing fixed cost Product margin Marketing and administrative costs (all fixed) Operating profit Chewy 1,400 bars $ 84 45 $ 39 37 $440 Choco-Lite 4,200 bars $720 565 $155 59 $ 96 Total 7,600 bars $1,244 1,000 $ 244 133 390 $ 50 37 $ 13 $ 2 $ 111 47 $ 64 Industry volume was estimated at 84.0 million bars for budgeting purposes. Actual industry volume for July was 77.280 million bars. Required: a. Determine the sales price and sales activity variances. b. Break down the sales activity variance into the parts caused by industry volume and market share. Complete this question by entering your answers in the tabs below. Required A Required B Determine the sales price and sales activity variances. (Do not round intermediate calculations. Enter your answers in thousands. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Sales price variance Sales activity variance Complete this question by entering your answers in the tabs below. Required A Required B Break down the sales activity variance into the parts caused by industry volume and market share. (Do not round intermediate calculations. Enter your answers in thousands rounded to 1 decimal place. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Market share variance Industry variance
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