Leaf limited has had a mixed year .it's market share has improved by 2 percentage points to 20%but overall market had contracted by 5 % in the same period .the budgeted sales were 504000 units and standard contribution was 12 $per unit .what is the level of actual sales
Options
a)two percentage points up to budget at 510080 units
b)three percentage down overall on budget at 488880
c)three percentage up on budget at 519120
4)up by a little over 5.50% to 532000 units
Kindly explain me the logic of answering thank you
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Market size variance
8y ago#1When they did the budget, the expected the market share to be 18% (20% - 2%).
Since the budgeted on sales of 504,000, they must have expected the market to be 504,000 / 18% = 2,800,000.
In fact the market contracted by 5%, so the actual market was 95% x 2,800,000 = 2,660,000.
The actual market share was 20%, and so their actual sales were 20% x 2,660,000 = 532,000.
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