loader  Loading... Please wait...

Question(s) / Instruction(s):

14- 23

Variance analysis, multiple products. The Detroit Penguins play in the American Ice Hockey League. The Penguins play in the Downtown Arena (owned and managed by the City of Detroit), which has a capacity of 15,000 seats (5,000 lower- tier seats and 10,000 upper- tier seats). The Downtown Arena charges the Penguins a per- ticket charge for use of its facility. All tickets are sold by the Reservation Network, which charges the Penguins a reservation fee per ticket. The Penguins budgeted contribution margin for each type of ticket in 2012 is computed as follows:

Lower- Tier Tickets                Upper- Tier Tickets

Selling price                         $ 35                                 $ 14

Downtown Arena fee                 10                                6

Reservation Network fee        5                                3

Contribution margin per ticket        $ 20                                $ 5

The budgeted and actual average attendance figures per game in the 2012 season are as follows:

Budgeted Seats Sold                Actual Seats Sold

Lower tier                4,000                                3,300

Upper tier                6,000                                7,700

Total                        10,000                                11,000

There was no difference between the budgeted and actual contribution margin for lower- tier or upper-tier seats. The manager of the Penguins 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.

1. Compute the sales- volume variance for each type of ticket and in total for the Detroit Penguins in 2012. Required (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 2012.

3. Present a summary of the variances in requirements 1 and 2. Comment on the results.

Find Similar Answers by Subject

Student Reviews

Rate and review your solution! (Please rate on a Scale of 1 - 5. Top Rating is 5.)

Expert's Answer
Download Solution:

This solution includes:

  • Plain text
  • Cited sources when necessary
  • Attached file(s)
  • Solution Document(s)

You Recently Viewed...

Reach Us