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Sales Market Size Variance

This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.

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August 26, 2020 at 6:20 pm #582200
thuongha
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“Leaf Ltd has had a mixed year. Its market share has improved 2% to 20% but the overall market had contracted by 5% in the same period. Budgeted sales were 504000 units and standard contribution was $12 per unit. What is the sales market size variance?”
Hi sir, the answered for this was $302400 adverse but I couldn’t really understand Kaplan’s explanation. Could you help with this please?
Thank you so much.
August 27, 2020 at 7:32 am #582251
John Moffat
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- Topics: 57
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They budgeted on selling 504,000 units.
The market as a whole has reduced by 5% and so on this alone they would expect their sales to reduce by 5% x 504,000 = 25,200 units.
This would lose them 25,200 x $12 = $302,400.
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