The Detroit Panthers play in the American Ice Hockey League. The Panthers play in the Downtown Arena (owned and managed by the City of Detroit), which has a capacity of 17,500 seats (6,000

lower-tier seats and 11,500 upper-tier seats). The Downtown Arena charges the Panthers a per-ticket charge for use of their facility. All tickets are sold by the Reservation Network, which charges the Panthers a reservation fee per ticket. The Panthers' budgeted contribution margin for each type of ticket in 2012 is computed as follows:

(Click the icon to view the budgeted contribution margin information.)

The budgeted and actual average attendance figures per game in the 2012 season are as follows: (Click the icon to view the budgeted and actual average attendance figures.)

There was no difference between the budgeted and actual contribution margin for lower-tier or upper-tier seats. The manager of the Panthers was depressed that actual attendance was 12% below budgeted attendance per game, especially given the booming state of the local economy in the past six months.

Read the requirements.

Requirement 1. Compute the sales-volume variance for each type of ticket and in total for the Detroit Pa variances in terms of contribution margins.)

Determine the formula for sales-volume variance, then compute the sales-volume variance for each type Detroit Panthers in 2012. (Calculate all variances in terms of contribution margins.) Label each variance a unfavorable {U).

Lower-tier Upper-tier

The total sales-volume variance is $0 Ll

) x :::::============

) x :=========

) x -------

Requirement 2. Compute the sales-quantity and sales-mix variances for each type of ticket and in total i

Let's first determine the formula for the sales-quantity variance, then calculate the variance for each type Label each variance as favorable (F) or unfavorable (U). (Enter percentages as a whole number.)

Lower-tier

Actual Budgeted

CM per ti

) x sales-mix

) x I ========:

Upper-tier

) x I .

Now determine the formula for the sales-mix variance, then calculate the variance for each type of ticket

3.

(cont.)

each variance as favorable (F) or unfavorable (U). (Enter percentages as a whole number.)

Actual Budgeted

( % - I I % ) x

Lower-tier ( I % - I I % ) x

Upper-tier ( I % - I I % ) x

Actual Budge

The total sales-mix variance is $0 I I

o;'.'1"!.

Requirement 3. Comment on the variance results from requirements 1 and 2.

The Detroit Panthers

increased decreased

average attendance by 12% per game. The net result: the actual cont

above below

the budgeted contribution margin.

Data Table

Lower-Tier Tickets Upper-Tier Tickets

Selling price Downtown Arena fee

Reservation Network fee

$ 39

8

5

$ 15

4

3

Contribution margin per ticket $ 26 $ 8

Data Table

		Budgeted Seats Sold	Actual Seats Sold
	Lower tier	5,000	3,300
	Upper tier	7,500	7,700
	Total	12,500	11,000
Requirements

Requirements

Compute the sales-volume variance for each type of ticket and in total for the Detroit Panthers in 2012. (Calculate all variances in terms of contribution margins.)

Compute the sales-quantity and sales-mix variances for each type of ticket and in total in 2012.

Comment on the variance results from requirements 1 and 2.

3.

(cont.)

Definition

CM _ contribution margins