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The following scenario relates to three requirements. Suction Co is a market leader in selling vacuum cleaners globally. Its mission statement is 'to make the
The following scenario relates to three requirements. Suction Co is a market leader in selling vacuum cleaners globally. Its mission statement is 'to make the most effective cordless vacuum cleaners in the world.' Its most prestigious cordless vacuum cleaner in recent years has been the 'D6 Powerhorse'. Although at the top end of Suction Co's product range and with a recommended retail price (budgeted price) of $580 per unit, the D6 has continued to be one of Suction Co's best-selling vacuum cleaners. The global market for cordless vacuum cleaners has increased steadily in size each year for several consecutive years. Suction Co's global sales of cordless vacuum cleaners have also increased steadily in line with the market, however, in the last year the expansion of the market has unexpectedly begun to slow. Two years ago, Suction Co launched its first robotic vacuum cleaner, the 'D7 Roboclean', which is controlled from its owner's smartphone. The recommended retail price (budgeted price) is $1,000 per unit. Suction Co claims that the D7 is infinitely superior to the models introduced by its competitors. In the last year, the global market for robotic vacuum cleaners has increased by 10%. Suction Co's main competitor has been a company called Vacuum Co. However, Vacuum Co has recently gone into liquidation after its newly launched robotic vacuum cleaner caught fire while charging overnight, which resulted in a massive product recall worldwide. The following information is available for Suction Co for the last year: Note: Rent, rates and depreciation costs are absorbed on the basis of budgeted units of production. (a) Calculate the following TOTAL variances for Suction Co: (i) The sales mix profit variance. (ii) The sales quantity profit variance
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