please provide a detailed answer for 16-19...thank u oulae sles volulmè variance
ID: 2525598 • Letter: P
Question
please provide a detailed answer
for 16-19...thank u
oulae sles volulmè variance. Do you agree? Why or why not? 16-17 What are the relationships among a selling price variance, a sales mix variance, a sales quantity variance, and a sales volume variance? 16-18 Distinguish between market size variance and market share variance. 16-19 "A favorable sales quantity variance indicates that the marketing manager has done a good job." Do you agree? Can you give an example in which a market size variance or market share variance is opposite to that of the sales quantity variance?Explanation / Answer
16-17
Sales Value Variance: This is the basic variance which can be calculated by making comparison between the actual sales and budgeted sales. Two sub-variances constitute this basic variance, viz., (a) sales price variance & (b) sales volume variance.
Sales Price Variance: The comparison between actual sales value & actual sales at standard values is calculated by this variance.
Sales Volume Variance: The comparison between budgeted sales & actual sales at standard values are done by Sales Volume variance. The sales volume variance can be sub-divided into two components when sale of more than one product is made.
Sales Mix Variance: The effect of variations from the planned sales mixture is shown by the sales mix variance.
Sales Quantity Variance: The effect of the unit volume which varies from the budget is revealed by the sales quantity variance.
The difference between sales volume variance and sales quantity variance is that the former is calculated using the actual sales volume whereas the latter is calculated using the sales volume of products in the proportion of standard mix.
Relationship between the variances:
Sales Value Variance =Sales Price Variance + Sales Volume Variance
Sales Price Variance = Sales Value Variance – Sales Volume Variance
Sales Volume Variance = Sales Value Variance – Sales Price Variance
16-18
Market share variance:
Market share means the percentage of the market that a company has. Market share variance occurs when a difference exists between the actual market share of a company and the expected/budgeted market share.
Market Size Variance:
Market size describes the entire scope of a single market. Market size variance helps a company to determine whether a decrease or increase in sales causes from an increase or decrease in the size of the market.
Market share variance determines exclusively the change in the company’s percentage in the market. Market size variance examines the relationship between a company’s percentage of a market and the overall size of that market.
16-19
I agree. Favourable sales quantity variance arises because the actual units of the product sold exceed the budgeted units of product sold. A marketing manager has a key role for occurrence of favourable sales quantity variance because he is the one who develops strategies for marketing the company products to increase sales. Hence favourable sales quantity variance indicates that the marketing manager has done a good job.
When market data is available, the sales quantity variance can be subdivided into market size and market share variances. When company’s share in the market decreases it may show adverse market share variance. But sales quantity variance can be favourable even when there is adverse market share variance when
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