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there is question from December 2007 where you should analyse the total sales volume variance into components for market size & market share
budget volume 180,000 units sales price $17 standard contribution $7
actual volume 176,000 units sales price 16.40
total market for diaries is estimated in budget 1.8m units
actual total market shrank 1.6m units period under reviewI assume that the question actually says that the actual total market shrank to 1.6M
The budget assumed a 10% market share (180,000 / 1.8M)
Since the actual total market was only 1.6M, then a 10% market share would be only 160,000.
Therefore the change in volume due to market size would be 180,000 – 160,000 = 20,000 units (adverse).
Given they would then have expected to sell 160,000 units but they actually sold 176,000, the extra 16,000 units (favourable) are due to a change in market share.
In both cases the units would be costed at standard contribution of $7 per unit as usual.
tell me if I am right
market share is 180,000-160,000 (180,000/1,800,000*1,6000,000)x7=140,000( A)
market size 160,000-176,000*7=112000(F)
it almost like planning & operational variance
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