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Infonautics' senior vice president of marketing prepared his budget at the beginning of the third quarter assuming a 40% market share based on total sales.
Infonautics' senior vice president of marketing prepared his budget at the beginning of the third quarter assuming a
40%
market share based on total sales. Foolinstead Research estimated that the total handheld-organizer market would reach sales of
282,500
units worldwide in the third quarter. However, actual sales in the third quarter were
400,000
units.
Data Table Actual Operating Data, Third Quarter 2017 Selling Variable Cost Contribution Sales Volume in Price Margin per Unit Units 365 $ 177 $ 188 18,530 per Unit PalmPro PalmCE 285 94 191 41,420 49,050 PalmKid 108 74 34 109,000 Total Data Table Cost per Budgeted Operating Data, Third Quarter 2017 Variable Sales Contribution Volume Selling Price Unit Margin per Unit in Units PalmPro $ 377 $ 184 $ 193 10,170 PalmCE 277 99 178 48,590 PalmKid 150 71 79 54,240 113,000 Total Requirement 1. Calculate the market-share and market-size variances for Houston Infonautics in the third quarter of 2017 (calculate all variances in terms of contribution margins). (Abbreviation used: CM = contribution margins) Begin by determining the formula for the market share variance, then calculate the variance for Houston Infonautics in the third quarter of 2017. Label the variance as favorable (F) or unfavorable (U). (For amounts entered into the formula, enter all amounts to two decimal places except for units.) Actual Budgeted Actual Budgeted CMcomposite unit Market-share market share market share market size-units X for budgeted mix = variance 400000 109000 x 113000 Now determine the formula for the market-size variance, then calculate the variance for the third quarter of 2017. Label the variance as favorable (F) or unfavorable (U). (For amounts entered into the formula, enter all amounts to two decimal places except for units. Round your final answer to the nearest whole number.) Actual Budgeted Market-size Budgeted market sizeunits Budgeted total CM for budgeted mix market size-units ) * market share variance 400000 282500 ) * X Requirement 2. Explain what happened based on the market-share and market-size variances. (Enter the variance as a positive number.) While the market share the overall in the total market size results in a(n) sales- quantity variance ofStep by Step Solution
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