Market Share Variance, Market Size Variance Katie’s Coffee Makers Inc. projected budgeted unit sales for the entire specialized coffee maker industry to be 2,500,000 (of all model types), and actual unit sales for the industry were 2,550,000. Budgeted Actual Sales in units, French Press 25,000 25,800 Sales in units, AeroPress 15,000 14,000 Total contribution margin $3,250,000 Budgeted average unit contribution margin $81.25 1. Calculate the market share variance (take percentages out to four significant digits. Use the rounded percentages for subsequent requirements.) 2. Calculate the market size variance.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Market Share Variance, Market Size Variance
Katie’s Coffee Makers Inc. projected budgeted unit sales for the entire specialized coffee maker industry to be 2,500,000 (of all model types), and actual unit sales for the industry were 2,550,000.
| Budgeted | Actual | ||
| Sales in units, French Press | 25,000 | 25,800 | |
| Sales in units, AeroPress | 15,000 | 14,000 | |
| Total contribution margin | $3,250,000 | ||
| Budgeted average unit contribution margin | $81.25 |
1. Calculate the market share variance (take percentages out to four significant digits. Use the rounded percentages for subsequent requirements.)
2. Calculate the market size variance.
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