Question

A favorable sales quantity variance indicates that the marking manager has done a good job. Do you agree? Can you give an example in which a market size variance or market share variance is opposite to that of the sales quantity variance?

Answer 1

Answer:

A firm advantages from an favorable sales quantity variance just if there are no unfavorable changes in selling costs or sales mix variance.A favorable sales quantity variance may not be valuable to the firm,if the firm brought down it's selling costs or sold a greater amount of low priced,low margin and less of high priced,high-margin items.

An expansion in the all out market size regularly prompts an favorable sales quantity variance. Strategically , the favorable sales quantity variance may not be good for the firm,if the firm has a negative or unfavorable market share variance.

However,a firm can have a positive market size variance and troublesome sales quantity variance if the firm sold less units than the quantity of units budgeted for the period in a period that the absolute market increased.Conversely ,the market size variance of a firm can be unfavorable in light of the fact that the total market contracted but then the firm experienced favorable sales quantity variance a from selling a more number of units than the quantity of units budgeted for the period

Relationships between a market share variance and a sales quantity variance can be in either direction.A firm can have a favorable sales quantity variance and an unfavorable market share price difference when the increase in number of units sold is not exactly the extent to the increment of the absolute market or total market .The sales quantity variance would be unfavorable ,if a firm sold less units than the budgeted units in spite of the fact that the firm experienced market share variance when the reduction in the all out number of units was not exactly the diminishing in the total market.