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 year.

Please respond True or False to the following statement:

1.The market size variance could be explained by an underestimation of the growth in the market for 2020

2.In terms of analysing managerial performance, the market share variance is more useful than the market size variance

3.The positive market size variance suggests profits are higher than expected due to the market share being higher than expected

4.$15 100 of the operating profit variance is due to actual sales volumes being different from expected sales volumes

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

6.Non-variable costs are within budget\

7.According to the market share variance, the PV Division has experienced a decrease in market share from last year

8.The product mix variance is wholly due to the lower volumes for large PV systems than expected

SPS Ltd - PV Division Variance Report Year ended 31 December 2020 FLEXED BUDGET variance BUDGET 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 $/ 1.75 1.50 1.00 $/ 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 86,482 278,312 (130,332) (71,382) (201,714) 61,498 15,100 76,598 (21,524) (21,524) 39,974 15,100 55,073 (12,116) 266,196 (316) (202,030) (12,432) 64,166 (646) (22,170) (13,077) 41,996 Market Data 2019 actual 2,272 2020 planned 2,600 2020 actual 4,972 market size (MW) $'000 Profit Variance Analysis planned operating profit $'000 39974 market size variance market share variance product mix variance 56105 -31506 -9499 15100 price variance variable cost variance non-variable cost varia -12116 -316 -646 -13077 total variance 2022 actual operating profit 41996