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respected sir,
this question is from kaplan kit .
Q: leaf limited has had a mixed year.ITs market share has improved two percentage points to 20% but the overall market had contracted by 5% in the same period . budget sales were 504000 units and standard contribution was $12 per unit.
WHAT IS THE LEVEL OF ACTUAL SALES?
A. two percentage points up on budget at 510080units
B.three percent down overall on budget at 488880units
B.three percent up on budget at 519120units
D.up by a little over five and half percent to 532000 unitsand same scenario requires market size and market share variances?
🙁 it is a bouncer to me!They budgeted on selling 504,000 units and were expecting the market share to be 18%. So they must have expected the total market to be 504,000 / 18% = 2,800,000 units.
The market actually contracted by 5%, so the actual market size was 95% x 2,800,000 = 2,660,000 units.
Their share was actually 20% and so they actually sold 20% x 2,660,000 = 532,000 units.
what would be the revise contribution for planning and operational variance and how?please:(
There is no mention of the standard contribution changing and so it will remain at $12 per unit.
The planning variance will be the change due to the fall in the market of 5%. The operational variance will be the increase in the market share.
I would assume that the actual workings are in the Kaplan answer 🙂
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