Market size variance
A market size variance isolates the sales-volume effect of the total market being different from the original forecast, assuming the organisation maintains its budget market share. Value the resulting quantity change using the specified standard profit or contribution. It is a planning-style explanation, while a market share variance addresses performance against the revised market opportunity. Causes and responsibility must still be evaluated rather than assumed solely from the label.
Worked example
Budget market is 100,000 units and share 10%. Actual market is 120,000. At unchanged share, expected sales rise by 2,000; at $4 contribution this gives an $8,000 favourable size effect.
Common mistake
Do not use the company’s actual share when calculating the effect intended to hold budget share constant.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | PM | Direct | September 2026–June 2027 |
