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Please do not use excel for this question. Please only use the following formula to answer this question and show your full workings in individual
Please do not use excel for this question.
Please only use the following formula to answer this question and show your full workings in individual steps:
product mix variance II actual market size actual market share X difference in planned weighted average contribution margin per unit In the last twenty years the company has made significant investments in their manufacturing technology including a sugar refinery, tetra pak plant and their own plastic bottle plant. They are now relatively significant players in the soft- drink and fruit juice range holding a market share of about 20%. Their fruit juice product range comprises fresh pineapple, orange, mango, apple, blackcurrant, coconut, pear, peach and passionfruit juice and fruit blends (such as tropical punch, orange/mango etc). This industry has been growing moderately for the past five years but has struggled with high prices for juice, a result of poor seasons and wild weather. The key industry statistics are included in the following table. Key Juice Drink Manufacturing Industry Statistics Industry Size $750 million revenue 500 million litres in 2009 522.5 million litres in 2010 Market Size Growth (2009 to 2010) 4.5% per annum Key Juice Drink Industry Participants - Market Share San Miguel 55% Golden Fruits 20% Coca-Cola Amatil Private Labels (home brands) 1096 P&N Beverages 7-996 Cadbury Schweppes 1-296 Others Approx 196 In 2010, Golden Fruits recorded substantial losses and chairperson Erin Popper stated the company needed to cut costs by more than $25 million a year to overcome inefficiencies. In order to support an analysis of the efficiency and competitive effectiveness of the juice segment during 2010, the following information has been compiled: Volume Revenue Variable COGS Contribution margin Fixed product line costs Allocated corporate costs (4% of revenue) Segment profit/loss Master Budget 2010 100 million litres $150 mill $120 mill $30 mill $20 mill $6 mill $4 mill Actual Results 2010 103 million litres $170 mill $145 mill $25 mill $21 mill $6.8 mill $12.8) mill The 2010 budget was prepared on the basis of zero growth from 2009 and an expected market share of 20% Tasks 1. Calculate the market size and market share variances Market Size = change in market size budgeted market share planned avg CM = (522.5m - 500m) * 20% 3 = 22.5m. 2.3 = $1 350 000 F Market share = actual market size change in market share planned avg CM = 522.5 * (10/500 - 103/522.5) 3 = 522.5 0.0029.3 = $454 575 U volume master budget volume variance adjusted budget price/unit cost variance actual volume million litres 100.000 103.000 103.000 revenue COGS contribution margin operating expense segment profit / (loss) $'000,000 $'000,000 $'000,000 $'000,000 $'000,000 150.000 (120.000) 30.000 (26.000) 4.000 154.500 (123.600) 30.900 0.900 15.500 (21.400) (5.900) (1.800) 170.000 (145.000) 25.000 (27.800) (2.800) $'000,000 $'000,000 $'000,000 $'000,000 4.000 planned segment profit maket size variance market share variance product mix variance volume variance 1.350 (0.455) 0.005 0.900 15.500 (21.400) (5.900) price variance COGS variance unit price/unit cost variance contribution margin variance operating expense variance segment profit variance actual segment loss (5.000) (1.800) (6.800) (2.800) product mix variance II actual market size actual market share X difference in planned weighted average contribution margin per unit In the last twenty years the company has made significant investments in their manufacturing technology including a sugar refinery, tetra pak plant and their own plastic bottle plant. They are now relatively significant players in the soft- drink and fruit juice range holding a market share of about 20%. Their fruit juice product range comprises fresh pineapple, orange, mango, apple, blackcurrant, coconut, pear, peach and passionfruit juice and fruit blends (such as tropical punch, orange/mango etc). This industry has been growing moderately for the past five years but has struggled with high prices for juice, a result of poor seasons and wild weather. The key industry statistics are included in the following table. Key Juice Drink Manufacturing Industry Statistics Industry Size $750 million revenue 500 million litres in 2009 522.5 million litres in 2010 Market Size Growth (2009 to 2010) 4.5% per annum Key Juice Drink Industry Participants - Market Share San Miguel 55% Golden Fruits 20% Coca-Cola Amatil Private Labels (home brands) 1096 P&N Beverages 7-996 Cadbury Schweppes 1-296 Others Approx 196 In 2010, Golden Fruits recorded substantial losses and chairperson Erin Popper stated the company needed to cut costs by more than $25 million a year to overcome inefficiencies. In order to support an analysis of the efficiency and competitive effectiveness of the juice segment during 2010, the following information has been compiled: Volume Revenue Variable COGS Contribution margin Fixed product line costs Allocated corporate costs (4% of revenue) Segment profit/loss Master Budget 2010 100 million litres $150 mill $120 mill $30 mill $20 mill $6 mill $4 mill Actual Results 2010 103 million litres $170 mill $145 mill $25 mill $21 mill $6.8 mill $12.8) mill The 2010 budget was prepared on the basis of zero growth from 2009 and an expected market share of 20% Tasks 1. Calculate the market size and market share variances Market Size = change in market size budgeted market share planned avg CM = (522.5m - 500m) * 20% 3 = 22.5m. 2.3 = $1 350 000 F Market share = actual market size change in market share planned avg CM = 522.5 * (10/500 - 103/522.5) 3 = 522.5 0.0029.3 = $454 575 U volume master budget volume variance adjusted budget price/unit cost variance actual volume million litres 100.000 103.000 103.000 revenue COGS contribution margin operating expense segment profit / (loss) $'000,000 $'000,000 $'000,000 $'000,000 $'000,000 150.000 (120.000) 30.000 (26.000) 4.000 154.500 (123.600) 30.900 0.900 15.500 (21.400) (5.900) (1.800) 170.000 (145.000) 25.000 (27.800) (2.800) $'000,000 $'000,000 $'000,000 $'000,000 4.000 planned segment profit maket size variance market share variance product mix variance volume variance 1.350 (0.455) 0.005 0.900 15.500 (21.400) (5.900) price variance COGS variance unit price/unit cost variance contribution margin variance operating expense variance segment profit variance actual segment loss (5.000) (1.800) (6.800) (2.800)Step by Step Solution
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