Variance analysis, multiple products. 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 capac- ity 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 reserva- tion fee per ticket. The Tigers' budgeted contribution margin for each type of ticket in 2017 is computed as follows: Lower-Tier Tickets Upper-Tier Tickets $18 Selling price $33 Downtown Arena fee Reservation Network fee 4 5 Contribution margin per ticket $20 The budgeted and actual average attendance figures per game in the 2017 season are as follows: Budgeted Seats Sold Actual Seats Sold Lower tier 4,500 3,300 Upper tier Total 7,700 5,500 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 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.
Variance analysis, multiple products. 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 capac- ity 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 reserva- tion fee per ticket. The Tigers' budgeted contribution margin for each type of ticket in 2017 is computed as follows: Lower-Tier Tickets Upper-Tier Tickets $18 Selling price $33 Downtown Arena fee Reservation Network fee 4 5 Contribution margin per ticket $20 The budgeted and actual average attendance figures per game in the 2017 season are as follows: Budgeted Seats Sold Actual Seats Sold Lower tier 4,500 3,300 Upper tier Total 7,700 5,500 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 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.
Chapter1: Financial Statements And Business Decisions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Compute the sales-quantity and sales-mix variances for each type of ticket and in total in 2017
Transcribed Image Text:Variance analysis, multiple products. 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 capac-
ity 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 reserva-
tion fee per ticket. The Tigers' budgeted contribution margin for each type of ticket in 2017 is computed as follows:
Lower-Tier Tickets
Upper-Tier Tickets
$18
Selling price
$33
Downtown Arena fee
Reservation Network fee
4
5
Contribution margin per ticket
$20
The budgeted and actual average attendance figures per game in the 2017 season are as follows:
Budgeted Seats Sold
Actual Seats Sold
Lower tier
4,500
3,300
Upper tier
Total
7,700
5,500
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 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.
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