SPS Ltd operates in the high-technology energy solutions sector. The PV Division designs, manufactures and installs solar panel systems. These systems are sold as either: small, medium or large systems. Small systems have a peak power generating capacity up to 100 kW (100,000 W); medium systems up to 1 MW (1,000,000 W); and large systems above 1 MW. The following information relates to the planning and actual data for 2020.

Which of the following statements is most likely to be true:

Group of answer choices

The product mix is not relevant because a customer that needs a large system is unlikely to buy a medium or small system.

The product mix variance is not useful because it can be measured only after the reporting period.

The product mix variance is relevant because the entity is able to quickly shift resources from one product line to another.

The product mix variance is irrelevant as the products are not substitutes

The positive market size variance suggests that profits are higher than expected due to:

Group of answer choices

The PV market being larger than was anticipated when the 2020 budget was prepared.

The PV Divisions market share being higher than expected.

None of the other options

Rapid growth in the PV market size in recent years.

The favourable profit variance of $2 022 is largely due to:

Group of answer choices

Lower-than-expected variable costs per MW

Efficiency improvements in the PV Divisions operations

Growth of the PV market in terms of MW sold

The size of the PV market being higher than expected

The favourable market share variance of $56,105 indicates that:

Group of answer choices

The PV Division benefited from the market growth in 2020.

The PV Division captured more of the market than planned.

The PV Division captured more of the market than it did last year.

The PV Division captured less of the market than planned.

The unfavourable product mix variance is due to:

Group of answer choices

Fewer large systems were sold.

The average contribution margin per MW was lower than planned.

The selling price was lower than expected for all three types of PV panels.

The total contribution margin was lower than planned.

Which of the following statements is TRUE with respect to the market size for solar panel systems:

Group of answer choices

The market size is increasing as the actual market size for 2020 was above the actual market size in 2019.

The market size for PV panels is increasing as the planned market size for 2020 is above the actual market size for 2019.

The actual market size in 2020 is lower than actual market size in 2019.

The market size is increasing as the actual for 2020 was above the budgeted for 2020.

SPS Ltd - PV Division Variance Report Year ended 31 December 2020 FLEXED BUDGET BUDGET variance variance ACTUAL Operational Data Average Price Small Systems Medium Systems Large Systems $/w 2.25 2.00 1.75 $/W 2.20 1.95 1.50 Average Variable Cost Small Systems Medium Systems Large Systems $/w 1.75 1.50 1.00 $/w 1.68 1.45 1.25 Sales Volume Small Systems Medium Systems Large Systems MW 10.000 45.000 45.332 100.332 MW 15.000 100.000 25.464 140.464 $'000 $'000 Financial Data Total for PV Division sales revenue variable costs contribution non-variable costs operating profit 191,830 (130,332) 61,498 (21,524) 39,974 86,482 (71,382) 15,100 278,312 (201,714) 76,598 (21,524) 55,073 (12,116) (316) (12,432) (646) (13,077) 266,196 (202,030) 64,166 (22,170) 41,996 15,100 Market Data 2019 actual 2,272 2020 planned 2,600 2020 actual 4,972 market size (MW) 328 2,372 Profit Variance Analysis Year ended 31 December 2020 39,974 planned operating profit market size variance market share variance product mix variance 56,105 (31,506) (9,499) 15,100 price variance variable cost variance non-variable cost variance (12,116) (316) (646) (13,078) total variance actual operating profit 2,022 41,996