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Peninsula Candy Company makes three types of candy bars: Chewy, Chunky, and Choco-Lite (Lite). Sales volume for the annual budget is determined by estimating the total market volume for candy bars and then applying the companyâs prior year market share, adjusted for planned changes due to company programs for the coming year. Volume is apportioned among the three bars based on the prior yearâs product mix, again adjusted for planned changes for the coming year.
The following are the company budget and the results of operations for July.
Industry volume was estimated at 80 million bars for budgeting purposes. Actual industry volume for July was 76 million bars.
a. Prepare an analysis to show the effects of the sales price and sales activity variances.
b. Break down the sales activity variance into the parts caused by industry volume and marketshare.
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