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“Bloom is proud to announce that it has managed to maintain its market share despite an overall increase in the market size by 10%.” However, the sales director when challenged, by this journalist recently admitted having been forced to reduce prices by $1.50 per bunch on average on a budget volume of 12,000 bunches. All is not as rosy as it seems in Bloom’s garden!
If the standard variable cost of a bloom bunch of flowers is $20 and the standard contribution gained is $5 what is the favourable sales volume variance
Sir in this question I didn’t understand how they got 13200 as the actual units sold
They had budgeted on selling 12,000 bunches. However the size of the market has increased by 10% and since they have maintained their market share (i.e. the same % of the overall market) then they will have sold 10% more as well.
12,000 + (10% x 12,000) = 13,200