Kay\'s Auto Products budgeted sales of 28,500 units of product B, assuming that
ID: 2597060 • Letter: K
Question
Kay's Auto Products budgeted sales of 28,500 units of product B, assuming that the company would have 15 percent of 190,000 units sold in a particular market. The actual results were 24,100 units, based on a 10 percent share of a total market of 241,000 units. The budgeted contribution margin is $5 per unit. Required: Compute the sales activity variance, and break it down into market share and industry volume. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.) Sales activity variance $ Market share Industry volume (Click to select) (Click to select) (Click to select)Explanation / Answer
market share = SCM*(AQ-ASQ) = 5*(24100-(241000*15%)) = 60250 U (unfavorbale )
industry volume = SCM*(ASQ-SQ) = 5*((241000*15%)-(190000*15%)) = 38250 F (favorble)
sales activity variance = 60250 U + 38250 F = 22000 U
therefore
sales activity variance $22000 U
market share $ 60250 U
industry volume $38250 F
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