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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/unitREQUIRED; analyse the total sales volume variance into market size and market share
thank you in advance for your assistance
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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