Market Size and Market Share Variances for Small Business Diane’s Designs is a small business run out of its owner’s house. For the past six months, the company has been selling two products, a welcome sign and a birdhouse. The owner has been concerned about the company’s marketing effectiveness. The master budget and actual results for March of this year follow:
| Master Budget | ||
| Welcome Sign | Birdhouse | Total |
Units | 50 | 25 | 75 |
Sales | $1,000 | $250 | $1,250 |
Variable costs | 890 | 1 20 | 1,010 |
Contribution margin | $ 110 | $130 | $ 240 |
Fixed costs | 75 | 75 | 150 |
Operating income | $ 35 | $ 55 | $ 90 |
| Actual Results | ||
| Welcome Signs | Birdhouses | Total |
Units | 45 | 35 | 80 |
Sales | $675 | $420 | $1,095 |
Variable costs | 580 | 270 | 850 |
Contribution margin | $ 95 | $150 | $245 |
Fixed costs | 75 | 75 | 150 |
Opera ting income | $ 20 | $ 75 | $95 |
The total market for welcome signs for the last six months are 3,000 budgeted and 3,000 actual. Diane expected the total market for birdhouses to be 200 units per month; the actual volume for the entire market, however, turned out to be only 175 units per month.
Required (rounding differences are acceptable)
1. Compare Diane’s Designs’ market share for welcome signs and birdhouses.
2. What is the market share contribution margin variance?
3. What is the market size contribution margin variance?
4. Explain possible reasons for these variances.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.