The Knife Store (KS) operates in the local market of Springfield, Ilinois. (KS)

Question

The Knife Store (KS) operates in the local market of Springfield, Ilinois. (KS) produces three typeso knives that have budgeted and actual sales data for knife products in the Springfield IL market as follows for the current month: udgeted sales in units udgeted selling price per unit udgeted variable cost per unit ctual sales in units ctual selling price per unit ctual variable cost per unit Pocket 7,200 5.00 3.00 10,800 $4.50 $2.50 Paring 4,800 $6.00 $ 2.00 3,600 5.00 2.00 Bread 4,000 $ 7.50 $2.50 7,200 $ 8.00 $ 2.00 ssume KS budgeted a 25% market share of total Knife product sales. Reliable industry data indicates hat the actual total number of knives sold for the month in Springfieid market was 72,000 a. Calculate the Market-Size Variance. b. Calculate the Market-Share Variance.

Explanation / Answer

Budgeted Market Size =16000/25% = 64000

Working:-

Actual Market Size Actual Market Size Budgeted Market Size ´ Actual Market Share ´ Budgeted Market Share ´ Budgeted Market Share ´ Budgeted Average ´ Budgeted Average ´ Budgeted Average Contribution Margin Contribution Margin Contribution Margin Per Unit Per Unit Per Unit =72000*22.22%*$3.23 =72000*25%*3.23 =64000*25%*3.23 $                      51,674.83 $                          58,140.00 $                                                 51,680.00 (a) (b) ( c) Market-share variance = a-b $                          (6,465.17) Unfavourable Market-size variance = b-c $                             6,460.00 Favourable

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