Question 4 Micro Myo is a mature company in the thermoplastic industry. Its latest innovation was thermoplastic granules used in the production of running shoes and rain boots. A few years ago, Micro Myo entered the Indian market with its products. The CEO asked you to prepare an analysis of last year's results based on the following budgeted and actual data. Actual sales prices and costs were exactly as budgeted, but actual profits were almost $160 million less than what was originally budgeted. Micro Myo 2010 2011 Unit sales for Indian market (tons) Budget running shoes 450,000 475,800 Budget - rain boots 960,000 1,055,000 Total 1,410,000 1,530,800 Unit sales for Indian market (tons) Actual running shoes 425,200 490,200 Actual rain boots 976,000 910,700 Total 1,401,200 1,400,900 Production for Indian market Running Shoes Rain Boots Units needed for production (tons) Budget - 2011 1,250,800 3,476,000 Budget - 2010 1,850,000 3,200,000 Actual 2011 1,422,400 3,210,000 Actual 2010 1,500,000 3,000,000 Budgeted 2011 data for Micro Myo Running Shoes Rain Boots Sales price (per ton) $2,900 $3,710 Variable cost (per ton) $1,895 $2,400 Required a. Compute the 2011 market share variance and the 2011 market-size variance for Micro Myo. b. Compute the sales-quantity variance and show that it matches the sum of the market-share variance and the market-size variance. C Explain why actual profit for Micro Myo was less than budgeted profit. Also explain the effects of the changes in the markets for running shoes and rain boots