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In: Accounting

ABC company are doing beraverage business. In their budget of last month, they expected to sell...

ABC company are doing beraverage business. In their budget of last month, they expected to sell 53438 units , with 3046107 units of expected total industry sales. However, the actual sales was 45622 units with 0.0151 market share. The average price was $4.41, and ABC budgeted for $4.09. The actual variable costs were $101235, and ABC budgeted variable costs is $92231.

1. Calculate actual valume

2. Calculate Expected volume

3.Calculate the market share variance

4.Is the above variance favorable or unfavorable?

Solutions

Expert Solution

1.) Actual Industry Volume        3,021,325 (45,622 / 0.0151 )
2.) Expected volume        2,600,574 (3,046,107 / 53,438) x 45,622
3.) Market Share variance:-
= ( Actual Market Share % - Budgeted Market Share % ) x Actual Industry unit x Budgeted Contribution margin per unit
= ( 0.0151 - 0.0175 ) x 3,021,325 x 2.36
= $ 17,113 Unfavorable
Working:
Budgeted market Share             0.0175 (53,438 / 3,046,107 )
Budgeted Contribution per unit 2.36 ( 4.09 - (92,231 / 53,438 ) )

ekkarill92 answered 2 years ago
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