Question

In: Accounting

In last month’s budget, a company anticipated selling 58350 units of its product, with total industry...

In last month’s budget, a company anticipated selling 58350 units of its product, with total industry sales expected to be 2365754 units. The actual sales level was just 43000 units with market share of 0.0282. The average sales price was $4.50, while the company had budgeted for $5.00. In addition, actual variable costs were $86000, while the budget had anticipated variable costs of $99200. Calculate Ia (round to 3 significant digits).

Find: I_a, S_b and market share variance. Steps are required.

Expert Solution

Market Share Variance=

|(Actual Market Share Percentage – Budgeted Market Share Percentage) x Actual Industry Sales in Units| x Budgeted Average Unit Contribution Margin.

= I(0.0282- 0.0247)* 1524823 units I * $3.3

= $ 17,611.70

W.N. 1

Calculation of Budgeted Market Share Percentage

= Budgeted sales of entity

Budgeted industry sales

= 58350 units = 0.0247

2365754 units.

W.N.2

Calculation of Actual Industry Sales in Units

= actual sales level

market share

= 43000 units = 1524823 units

0.0282

W.N. 3

Calculation of Budgeted Average Unit Contribution Margin

= Budgeted Sales Price – Budgeted Variable Price

= $5.00 - $99200

58350 units

=$5.00 - $1.70 = $3.30

Can you please let me know what do you mean by la and sb, so that I can solve it further.

ekkarill92 answered 2 years ago

The Mason Company produces and expects to sell 10,600 units of its product. Variable selling and...

The Mason Company produces and expects to sell 10,600 units of its product. Variable selling and administrative expense is $3.70 per unit sold and fixed selling and administrative expense is $50,000 per month. Included in the $50,000 fixed selling and administrative expense is a depreciation of $20,000. The budgeted selling and administrative cash payments for November is: $69,220. $39,220. $39,480. $89,220.

Last year, ABC Company produced 19,000 units of Product X. The fixed overhead budget was $160,000...

Last year, ABC Company produced 19,000 units of Product X. The fixed overhead budget was $160,000 and the expected level of production for the year was 20,000 units. The actual fixed overhead costs were $162,000. Required: Be sure to label each variance as F – favorable or U – unfavorable. 1. What is the predetermined fixed overhead rate for the year? 2. What was the fixed overhead budget or spending variance? 3. What is the fixed overhead volume variance?

If a competitive firm is selling 900 units of its product at a price of $10...

If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then its total cost is more than $9,000. its marginal revenue is less than $10. its average total cost is less than $10. the firm cannot be a competitive firm because competitive firms cannot earn positive profits.

If a competitive firm is selling 250 units of its product at a price of $22...

If a competitive firm is selling 250 units of its product at a price of $22 per unit and earning zero economic profit, then its average total cost is equal to $22. its average total cost is less than $22. its average variable cost is equal to $22. its average total cost is more than $22.

A Company is considering a new product line to supplement its range line. It is anticipated...

A Company is considering a new product line to supplement its range line. It is anticipated that the new product line will involve cash investment of $700,000 at time 0 and $1.0 million in year 1. After-tax cash inflows of $500,000 are expected in year 2, $300,000 in year 3, $700,000 in year 4, and $400,000 each year thereafter through year 10. Though the product line might be viable after year 10, the company prefers to be conservative and end...

At times, a product starts as a concept plus anticipated selling price. For example, "a writing...

At times, a product starts as a concept plus anticipated selling price. For example, "a writing pen that will sell for $20 each," or," a pair of dress shoes that will sell for $500 a pair." Why do you think that setting an approximate selling price might be a good idea when establishing a supply chain? For maximum credit explain how you came to each conclusion you presented in this answer.

Equivalent Units and Product Cost Report—Weighted Average Method In its first month’s op-erations (January 2016), Allred...

Equivalent Units and Product Cost Report—Weighted Average Method In its first month’s op-erations (January 2016), Allred Company’s Department 1 incurred charges of $120,000 for direct materials (10,000 units), $33,000 for direct labor, and $58,000 for manufacturing overhead. At month-end, 8,800 units had been finished and transferred out. The remaining units were finished with respect to material but only 25% complete with respect to conversion costs. Assuming Allred uses the weighted average method and that materials are added at the beginning...

Annually, xyz produces and sells 5,000 units of a product at its maximum capacity. The selling...

Annually, xyz produces and sells 5,000 units of a product at its maximum capacity. The selling price is $600 per unit. The variable production cost is $150 per unit, and the fixed production cost is $300 per unit. A customer has requested a special one-time order for 400 units of the product for $350 each. Accepting this special order will mean a loss of regular sales. However, this special order would not affect the total fixed cost. What is the...

irkland Company combines its operating expenses for budget purposes in a selling and administrative expense budget....

irkland Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2020, the following data are available. 1. Sales: 20,800 units quarter 1; 22,100 units quarter 2. 2. Variable costs per dollar of sales: sales commissions 5%, delivery expense 2%, and advertising 3%. 3. Fixed costs per quarter: sales salaries $10,900, office salaries $6,160, depreciation $4,490, insurance $2,080, utilities $880, and repairs expense $670. 4. Unit selling price: $24....

The master budget at Western Company last period called for sales of 225,300 units at $9.3...

The master budget at Western Company last period called for sales of 225,300 units at $9.3 each. The costs were estimated to be $3.78 variable per unit and $225,300 fixed. During the period, actual production and actual sales were 230,300 units. The selling price was $9.40 per unit. Variable costs were $4.80 per unit. Actual fixed costs were $225,300. Required: Prepare a sales activity variance analysis. (Indicate the effect of each variance by "F" for favorable, or "U" for unfavorable.)