Market-share and market-size variances (continuation of 14-36). Houston Infonautics’...

Market-share and market-size variances (continuation of 14-36). Houston Infonautics’ senior vice president of marketing prepared his budget at the beginning of the third quarter assuming a 25% market share based on total sales. Foolinstead Research estimated that the total handheld-organizer market would reach sales of 444,000 units worldwide in the third quarter. However, actual sales in the third quarter were 500,000 units.

1. Calculate the market-share and market-size variances for Houston Infonautics in the third quarter of 2014 (calculate all variances in terms of contribution margins).

2. Explain what happened based on the market-share and market-size variances.

3. Calculate the actual market size, in units, that would have led to no market-size variance (again using budgeted contribution margin per unit). Use this market-size figure to calculate the actual market share that would have led to a zero market-share variance.