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Market Share Variance, Market Size Variance

Katies Coffee Makers Inc. projected budgeted unit sales for the entire specialized coffee maker industry to be 2,500,000 (of all model types), and actual unit sales for the industry were 2,550,000.

	Budgeted		Actual
Sales in units, French Press	25,000		25,800
Sales in units, AeroPress	15,000		14,000
Total contribution margin	$3,250,000
Budgeted average unit contribution margin	$81.25

Required:

1. Calculate the market share variance (take percentages out to four significant digits. Use the rounded percentages for subsequent requirements.) FILL in blank

$--- Unfavorable

2. Calculate the market size variance.

$--- Favorable

3. What if Katie actually sold a total of 41,000 units (in total of the two models)? How would that affect the market share variance?

There would be no change.It would change from unfavorable to favorable.

The market size variance?

There would be no change.

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1. [(Difference between actual market share % and budgeted market share %) x actual industry sales units] x budgeted average unit contribution margin per unit.

2. [(actual industry sales in units budgeted industry sales in units) x budgeted market share %] x budgeted average unit contribution margin

3. It is desirable to have actual market share percentage > budgeted market share %

Market share is different from market size.

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