The Sasita Corporation manufactures two types of vacuum cleaners, the Zenith for commercial

building use and the House-Helper 2018 were as follows:

for residences. Budgeted and actual operating data for the year

Static Budget Number sold Contribution margin

Actual Results Number sold Contribution margin

Zenith 5,000 $1,500,000

Zenith 4,000 $1,280,000

House-Helper 20,000 $3,000,000

House-Helper 28,000 $3,920,000

Total 25,000 $4,500,000

Total 32,000 $5,200,000

Prior to the beginning of the year, a consulting firm

of the Zenith and House-Helper category to be 250,000 units, but actual industry volume was 256,000 units.

To understand the large difference between the budgeted contribution margin and the actual results the management accounting team is asked to prepare a detailed variance analysis in terms of the contribution margin for each product.

Required:

1. What is the flexible budget contribution margin?

2. What is the total flexible budget variance? Explain the results.

3. What is the sales volume variance for each product? Explain the results.

4. What is the sales mix variance for each product? Explain the results.

5. What is the total market share variance for each product? Explain the results.

6. If the marketing department year-end bonuses are based not only on the actual results compared to budgeted results but also on the accuracy of their budgeted projections for each product line, discuss whether the marketing department should receive a bonus for 2018?

7. Why should a company structure its compensation packages to include more than one performance measure?