Questiomt 31 Marks Coho Manufacturing Inc {CMI} manufactures two gaskets, used in heavy industrial equipment. One gasket, the E100, has many applications. The second gasket, the (SW500 is more specialized and is used in heavy equipment working in oolder climates. 2020 was not a particularly good year, for either the industry or CMI, due to a drop in demand brought about by the global pandemic and the entry of a new oompetitor into the market. CMI anticipated combined sales volume of 50,000 units when it developed the current year budget. For budget purposes, the E100 accounts 25% of the oompanyrs sales , with the (SW500 aooounting for the remainder of the sales volume. In the budget, the E100 had a unit selling price of $55.00. Variable manufacturing costs were budgeted at $26.00 per unit. Variable marketing and administration costs were from two items: Ilillr'll paid a oommission of 5% of the unit selling price of the E-100 and variable shipping costs were $1.00 per unit. The oommission on the GIN-500 as higher at 3% and the shipping cost was $1.50 per unit. The DIV-500 was budgeted to sell for $95.00 per unit. Variable manufacturing costs were $44.00 The market for the E-100 was very competitive in 2020. The sales manager was forced to lower the unit selling price to $42.00. The production manager was able to reduce the variable manufacturing costs by 5%. Actual volume for the year was 50,000 units. The (I'M-500 is more specializedI and the market has fewer oompet'rtors. The unit selling price remained on budget for the year, but variable manufacturing costs were 6% higher than anticipated. Volume was 25,000 units for the year. Question 4 (continued) Senior management is not anticipating good news when the final results are in and being analyzed. The only bright spot was that fixed manufacturing overhead costs for the year totaled $270,000, which was $30,000 below budget. Fixed costs for selling and administration, budgeted at $400,000, came in at $390,000. The company does not allocate fixed costs between products as any allocation would be meaningless. Anticipated industry volume was 800,000 units per year. Actual industry volume was lower than anticipated by 15%. Required: 1. What was the budgeted operating income for the current year? (4 marks) 2. What was the actual operating income for the current year? (3 marks) 3. Prepare a variance analysis from the information provide by calculating the following variances: a. Flexible budget variance for both products. (4marks) b. Sales volume variance for both products. (4 marks) C. Sales quantity variance for both products. (4 marks) d. Mix variance for both products. (4 marks) 4. Calculate the market size and market share variance for the gadgets. (4 marks) 5. Management has asked for your opinion on the results. Identify and explain two areas where CMI did better than expected and two areas of where the results were less than expected (4 marks)
