Planning and operational variance

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November 16, 2020 at 4:42 pm #595223
nk16
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Leaf limited has had a mixed year.its market share has improved two percentage points to 20% but the overall market had contracted by 5%in the same period. The budgeted sales were 504000units and standard contribution was 12$ per unit. What is the level of actual sales?
Ans – up by a little over five and half percent to 532000units ….
Plz explain the logic n concept behind it…I didn’t understand how they got 532000 units …
November 17, 2020 at 8:56 am #595260
John Moffat
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The budgeted market share was 18%, so the budgeted market was 504,000/18% = 2,800,000
The market fell by 5%, so the actual market was 95% x 2,800,000 = 2,660,000.
Leaf’s actual market share was 20%, so the actual sales = 20% x 2,660,000 = 532,000.
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