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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
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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 youWhen 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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