Question

Exercise 12.29 Stellar Unlimited expects to capture 54% of the flavoured water market. In a typical year, this market averages 2,000,000 units. This year sales reached an all-time high of 2,260,000 units. Stellar Unlimited sold 1,514,200 units. The standard contribution margin per unit for flavoured water is $1.34. Calculate the market share variance. (Enter all amounts as positive.) Market share variance $ < > LINK TO TEXT Calculate the market size variance. (Enter all amounts as positive.) Market size variance & <> LINK TO TEXT

Answer 1

Solution 1:

Actual Market Share Percentage = 1514200/ 2260000 = 67%

Market share variance = (Actual Market Share Percentage – Budgeted Market Share Percentage) x Actual Industry Sales in Units x Budgeted Average Unit Contribution Margin

= (67% - 54%) * 2260000 * $1.34 = $393,692 Favorable

Solution 2:

Market size variance = (Actual Industry Sales in Units – Budgeted Industry Sales in Units) x Budgeted Market Share Percentage] x Budgeted Average Unit Contribution Margin

= (2260000 - 2000000) *54% * $1.34

= $188,136 Favorable