Variance analysis, multiple products

Q1. The Chicago Tigers play in the American Ice Hockey League. The Tigers play in the Downtown Arena,
which is owned and managed by the City of Chicago. The arena has a capacity of 15,000 seats (5,500 lower-
tier seats and 9,500 upper-tier seats). The arena charges the Tigers a per-ticket charge for use of its facility.
All tickets are sold by the Reservation Network, which charges the Tigers a reservation fee per ticket. The
Tigers’ budgeted contribution margin for each type of ticket in 2017 is computed as follows:

The budgeted and actual average attendance figures per game in the 2017 season are as follows:

There was no difference between the budgeted and actual contribution margin for lower-tier or upper-tier
seats.
The manager of the Tigers was delighted that actual attendance was 10% above budgeted attendance per
game, especially given the depressed state of the local economy in the past six months.

Required:
1. Compute the sales-volume variance for each type of ticket and in total for the Chicago Tigers in 2017.
(Calculate all variances in terms of contribution margins.)
2. Compute the sales-quantity and sales-mix variances for each type of ticket and in total in 2017.
3. Present a summary of the variances in requirements 1 and 2. Comment on the results.

Q2. The Robin’s Basket operates a chain of Italian gelato stores. Although the Robin’s Basket charges
customers the same price for all flavors, production costs vary, depending on the type of ingredients.
Budgeted and actual operating data of its Washington, D.C., store for August 2017 are as follows:

Required:
1. Compute the total sales-volume variance for August 2017.
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2. Compute the total sales-mix variance for August 2017.
3. Compute the total sales-quantity variance for August 2017.
4. Comment on your results in requirements 1, 2, and 3.

Variance analysis, Variable & Fixed manufacturing overhead

Q 3. Esquire Clothing is a manufacturer of designer suits. The cost of each suit is the sum of three variable
costs (direct material costs, direct manufacturing labor costs, and manufacturing overhead costs) and one
fixed-cost category (manufacturing overhead costs). Variable manufacturing overhead cost is allocated to
each suit on the basis of budgeted direct manufacturing labor-hours per suit. For June 2017, each suit is
budgeted to take 4 labor-hours. Budgeted variable manufacturing overhead cost per labor-hour is $12. The
budgeted number of suits to be manufactured in June 2017 is 1,040.
Actual variable manufacturing costs in June 2017 were $52,164 for 1,080 suits started and completed.
There were no beginning or ending inventories of suits. Actual direct manufacturing labor-hours for June
were 4,536.
Esquire Clothing allocates fixed manufacturing overhead to each suit using budgeted direct
manufacturing labor-hours per suit. Data pertaining to fixed manufacturing overhead costs for June 2017
are budgeted, $62,400, and actual, $63,916.

Required:
1. Compute the flexible-budget variance, the spending variance, and the efficiency variance for variable
manufacturing overhead. Comment on the results.
2. Compute the spending variance for fixed manufacturing overhead. Comment on the results.
3. Compute the production-volume variance for June 2017. What inferences can Esquire Clothing draw
from this variance?