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    Market-Share and Market-Size Variances (Continuation of 14-27) - Actual Budgeted

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    Elliot Richard
    Soda-King budgeted for 2017 assuming a 12.5% market share of the 10 million carton western Australia soft drink market. However, the actual market was 12.3 million cartons and Soda-King's market share was 10%. This resulted in an unfavorable market share variance of $1,199,250 and a favorable market size variance of $1,121,250. The overall sales-quantity variance was unfavorable by $78,000 due to the lower than budgeted market share outweighing the increased market size.

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    Market-Share and Market-Size Variances (Continuation of 14-27) - Actual Budgeted

    Uploaded by

    Elliot Richard
    139 views1 page
    Soda-King budgeted for 2017 assuming a 12.5% market share of the 10 million carton western Australia soft drink market. However, the actual market was 12.3 million cartons and Soda-King's market share was 10%. This resulted in an unfavorable market share variance of $1,199,250 and a favorable market size variance of $1,121,250. The overall sales-quantity variance was unfavorable by $78,000 due to the lower than budgeted market share outweighing the increased market size.

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    WINDANG KA

    Original Title

    Soda

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    Soda-King budgeted for 2017 assuming a 12.5% market share of the 10 million carton western Australia soft drink market. However, the actual market was 12.3 million cartons and Soda-King's market share was 10%. This resulted in an unfavorable market share variance of $1,199,250 and a favorable market size variance of $1,121,250. The overall sales-quantity variance was unfavorable by $78,000 due to the lower than budgeted market share outweighing the increased market size.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    139 views1 page

    Market-Share and Market-Size Variances (Continuation of 14-27) - Actual Budgeted

    Uploaded by

    Elliot Richard
    Soda-King budgeted for 2017 assuming a 12.5% market share of the 10 million carton western Australia soft drink market. However, the actual market was 12.3 million cartons and Soda-King's market share was 10%. This resulted in an unfavorable market share variance of $1,199,250 and a favorable market size variance of $1,121,250. The overall sales-quantity variance was unfavorable by $78,000 due to the lower than budgeted market share outweighing the increased market size.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Soda-King prepared the budget for 2017 assuming a 12.

    5% market share based on total sales in the


    western region of the Australia. The total soft drinks market was estimated to reach sales of 10 million
    cartons in the region. However, actual total sales volume in the western region was 12.3 million
    cartons. Calculate the market-share and market-size variances for Soda-King in 2017. (Calculate all
    variances in terms of contribution margin.) Comment on the results.

    (20 min.) Market-share and market-size variances (continuation of 14-27).

    Actual Budgeted
    Western region 12.3 million 10 million
    Soda King 1.23 million 1.25 million
    Market share 10% 12.5%

    Average budgeted contribution margin per unit = $3.90 ($4,875,000 ÷ 1,250,000).

    Solution Exhibit 14-28 presents the sales-quantity variance, market-size variance, and market-
    share variance for 2017.

     Actual Budgeted  Budgeted contribution


    Market share Actual market  market market  margin per composite
    variance = size in units   share share  unit for budgeted mix
    – 

    = 12,300,000 × (0.10 – 0.125) × $3.90


    = 12,300,000 × 0.025 × $3.90
    = $1,199,250 U

     Actual Budgeted  Budgeted Budgeted contribution



    Market-size  market size market size  market margin per composite
    in units in units 
    variance =  –   share  unit for budgeted mix

    = (12,300,000 – 10,000,000) × 0.125 × $3.90

    = 2,300,000 × 0.125 × $3.90

    = 1,121,250 F

    The market share variance is unfavorable because the actual 10% market share was lower than
    the budgeted 12.5% market share. The market size variance is favorable because the market size
    increased 23% [(12,300,000 – 10,000,000) ÷ 10,000,000].

    The unfavorable market-share variance was greater than the increase in market size variance
    resulting in an unfavorable sales-quantity variance.

    Sales-Quantity Variance
    $78,000 U

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