(Appendix 11A)Yukon Company Expressed the Total Expenses (Y)component of Its

question 7

Essay

(Appendix 11A)Yukon Company expressed the total expenses (Y)component of its master budget for March with the cost formula Y = $100,000 + $40*X,where X represents the expected number of units of its only product to be manufactured and sold.The budgeted average selling price per unit was $65 for budgeted sales volume 5,000 units based on an estimated industry volume of 50,000 units.Reported actual results for February were as follows:

$\begin{array} { l r } \text { Sales } & \underline { 5,400 \text { units* } } \\\text { Sales revenue } & \$ 324,000 \\\text { Less variable costs } & \underline { 194.400 } \\\text { Contribution margin } & \$ 129,600 \\\text { Less fixed expenses } & \underline { 102.000 } \\\text { Operating income } & \$ 27.600 \\\end{array}$

*Actual industry sales volume was 60,000 units.

Required:

a) Calculate the flexible budget variance and analyze it into sales price variance and cost/expense variance(s).
b) Calculate the sales volume variance and analyze it into market-size (industry volume) variance and market-share variance.
c) On the basis of your analysis in parts (a) and (b), would you recommend a bonus be paid to the sales manager? Why or why not?

---

Definitions:

Pituitary

A small gland located at the base of the brain that produces hormones influencing various bodily functions, including growth and metabolism.

Fertility

The natural capability to produce offspring, often assessed through rates of conception and childbirth.

Heritability

A statistic used in genetics to estimate the proportion of variation in a phenotypic trait in a population that is attributable to genetic differences among individuals.

Fitness

Fitness refers to the condition of being physically fit and healthy, often resulting from regular physical activity and exercise.