A company sells three products: D, E and F. The market for the products dictates that the numbers of products sold are always in the ratio of 3D:4E:5F. 

Budgeted sales volumes and prices, and cost details for the previous period were as follows: 

The budgeted total fixed costs for that period were £31,200. 

The budget for the previous period was based on the company having a 20% share of the total market of 6000 units. 

It has now been realised that the size of the market had been underestimated. The actual total market size for that period was 7500 units. 

During that period the company actually sold 1740 units for a total of £109,500. Unit variable costs were as expected but total fixed costs were 10% higher than budgeted. 

The company reports variances using a standard marginal costing system. 

Required 

Calculate for the company for the previous period: 

a. The market-size variance. 

b. The market-share variance.

Transcribed Image Text:

D E F Sales units 300 400 500 Selling price per unit Contribution to £80 £55 £70 70% 65% 50% sales ratio