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market share and market size variance calculation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › market share and market size variance calculation

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
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  • Author
    Posts
  • September 4, 2017 at 4:56 pm #405400
    Anonymous
    Inactive
    • Topics: 1
    • Replies: 0
    • ☆

    hi John, there is a question which proves difficult for me. December 2007

    Spike Co has produced the following data relating to leather bound diaries sales for the year to date.
    BUDGET
    sales volume 180 000 units
    sales price $17/unit
    standard contribution $7/unit
    the total market for diaries in this period was estimated in the budget to be 1.8m units, but the actual market share shrank to 1.6m units for the period.

    ACTUAL RESULTS FOR THE SAME PERIOD
    sales volume 176 000 units
    sales price $16.40/unit

    REQUIRED; analyse the total sales volume variance into market size and market share

    thank you in advance for your assistance

    September 4, 2017 at 5:38 pm #405463
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54664
    • ☆☆☆☆☆

    They budgeted on having a market share of 10% (180,000 / 1,800,000).

    The actual market was only 1,600,000, and so a 10% share would have been 160,000.
    So the difference between the budgeted 180,000 and the 10% market share of 160,000 is the market size variance.

    Their actual sales were 176,000. So they got a bigger share of the market. So the difference between a 10% share which is 160,000 and the actual 176,000 is the market share variance.

    (Obviously, all costed out at the standard contribution)

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    Posts
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