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sir
std 8000/2000*40%=1.6
rev 8200/2000*40%=1.64
act 3600/2000=1.8(1.64-1.6)*80% plan variance
(1.8-1.64)*80% op varianceIn quarter 1 the market was for 4000 doctors and their share was 40%, so they will have budgeted on 40% x 4000 = 1600
It turned out that in quarter 2 the actual size of the market was 4100 doctors and so they should really have expected 40% x 4100 = 1640
The difference of 40 is due to the change in the market size and therefore the market size variance is 40 x the standard contribution of 80% = $32 favourable, and is a planning variancesir
i think this is the same logic but the answer is wrongThe question says that when the budgeted for quarter 2 they assumed that they would maintain the share of the market that it had in quarter 1.
In quarter 1 the market was for 14,000 nurses and their share was 30%, so they will have budgeted on 30% x 14,000 = 4,200 in quarter 2.
It turned out that in quarter 2 the actual size of the market was 18,900 nurses and so they should really have expected 30% x 18,900 = 5,670.
The difference of 1,470 is due to the change in the market size and therefore the market size variance is 1,470 x the standard contribution of 80% = $1,176 favourable, and is a planning variance.
So they should have expected to supply 5,670 nurses, but they actually supplied 5,300. So the difference of 370 is due to a change in their market share and therefore the market share variance is 370 x the standard contribution of 80% = $296 adverse, and is an operational variance.
The examiner has not ‘made up’ more variances. Although market share and market size variances are rarely asked you should have at least one question on them in your Revision Kit.
sir i don’t understand semi variable based on batch. y axis is $ and x axis is batch.and if number of batch is decreasing the cost should be increasing beacuse it requir more unit to produce.so the graph is decreasing . when x=0 y=4.000 but when x=500 y=26.000 it does’t make sense