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Dear John,
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 504000 units and standard contribution was $12/unit.
What is the level of actual sales?A, 2% points up on budget at 51080 unit
B, 3% down overall on budget at 488,888 unit
C, 3% up on budget at 519,120 unit
D, Up by a little over 5,5% to 532,000 unitsPlease explain how to tackle this question?
Many thanks,
Kind regards,
KatalinWhy are you attempting questions for which you do not have a printed answer? You should be using a Revision Kit from one of the ACCA approved publishers – they have answers and explanations!
The market share has improved to 20%, but when the budget was prepared it must have been 18%. So they were budgeting on the market as a whole being 504,000/18% = 2,800,000 units.
This year, the market fell by 95% and so is 95% x 2,800,000 units.
The company’s share was 20% of this, and so you can calculate how many they actually sold 🙂
Thank you very much John!
I am using Kaplan’s revision kit and there is no explanation just a calculation itself and was not able to understand the way how they’ve calculated the answer.
Your answers are always easy to understand 🙂Many thanks again!
Kind regards,
Katalin
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