QUESTION A: Revenue variances - Sly Bike Saylz Bicycles are the most used vehicles in the world. They can be used as; a means of transportation, for leisure tours, as well as for exercise. Sly Bike Sayz (SBS) is a retailer of hybrid bicycles. Its owner, Sal Novak Sly' focuses his sales on the bicycle rider who wants to comfortably ride their bike just as easily on city streets as on beach boardwalks, or on a weekend picnic. A hybrid bike has flat handlebars, user-friendly controls, a lighter frame and quicker wheels than a road bike. Sly focuses sales on the mid-range market for hybrid bikes where the consumer is willing to spend between $800 to $1,500 for a good quality bike. Sly relies on his sales manager, Hal Jarvis, to motivate his team of 10 sales staff to at least meet the annual budget. On top of a base salary and a 5 percent of revenue commission, each team member also receives an annual bonus when actual sales in units beat budgeted sales by at least 8%. Based on market analysis and keeping up to date on trends in bicycle styles, Hal set the following budgets at the beginning of the year. BUDGET Selling Variable cost Sales Volume Model price per unit in units Santa Fe $ 1,450 $ 1,015 4,125 Seti 1,150 782 2,750 Shrek 950 532 6,875 Total 13,750 The total sales figure represents 11% of the budgeted hybrid market in the area where SBS sells bicycles. Hal is fairly confident that the mix of each bike's sales to total is stable. it is year end and Corey, the cost accountant, has just printed off the raw data for the year and provided Sly and Hal with the following results: ACTUAL Selling Variable cost Sales Volume Model price per unit in units Santa Fe $ 1,550 $ 1,054 Seti 4,500 1,170 819 Shrek 4,125 950 500 6,375 Total 15,000 6. As controller, you ask Hal to provide you with year end actual market volume figures. He tells you that the actual market size for hybrid bikes for the year was 150,000 bicycles. Using this information and appropriate information from the question, calculate the following: a. The market size variance b. The market share variance 7. What do the market variances tell you about the success of the sales department? Should the sales bonuses be approved? Why or why not? Should the bonus policy be reviewed? If so, what should be considered