Part $1$

Cachet Slate Inc. $($CSI$)$ produces tablet computers. CSI markets three different handheld models. SlatePro is a souped$-$up version for the executive on the go; Slate is a consumer$-$oriented version; and SlateLite is a stripped$-$down version for the young adult market.

Cachet Slate's senior vice president of marketing prepared his budget at the beginning of the third quarter assuming a $40\%$ market share based on total sales. The total tablet market was estimated by Foolinstead Research to reach sales of $282$ comma $500$ units worldwide in the third quarter. However, actual sales in the third quarter were $437$ comma $500$ units. Budgeted and actual operating data for the company's third quarter of $2022$ are as follows:

LOADING...$($Click the icon to view the budgeted data.$)$ LOADING...$($Click the icon to view the actual data.$)$

RequiredLOADING...

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Part $1$

Requirement $1.$ Calculate the market$-$share and market$-$size variances for CSI in the third quarter of $2022($calculate all variances in terms of contribution margins$).$

Begin by determining the formula for the market$-$share variance, and then calculate the variance for Cachet Slate in the third quarter of $2022($calculate all variances in terms of contribution margins$).$ Label the variance as favourable $($F$)$ or unfavourable $($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 dollar.$)$

Actual

Budgeted

Actual

Budgeted

Market$-$share

$($

$)$ x

x

for budgeted mix

$=$

variance

Part $2$

$($

$)$ x

x

$=$

Part $3$

Now, determine the formula for the market$-$size variance, and then calculate the variance for the third quarter of $2022($calculate all variances in terms of contribution margins$).$ Label the variance as favourable $($F$)$ or unfavourable $($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 dollar.$)$

Actual

Budgeted

Budgeted

Budgeted

Market$-$size

$($

$)$ x

x

for budgeted mix

$=$

variance

Part $4$

$($

$)$ x

x

$=$

Part $5$

Requirement $2.$ Explain what happened based on the market$-$share and market$-$size variances.

While the market share

increased,

decreased,

the overall

decrease

increase

in the total market size results in a$($n$)$

unfavourable

favourable

sales$-$quantity variance of $

enter your response here.

Part $6$

Requirement $3.$ Calculate the actual market size, in units, that would have led to no market$-$size variance $($again using budgeted contribution margin per unit$).$ Use this market$-$size figure to calculate the actual market share that would have led to a zero market$-$share variance.

Using the formula that you determined above for the market$-$size variance, the actual market$-$size would need to be

$0$

$113,000$

$105,000$

$282,500$

$437,500$

units for there to be no variance.

Part $7$

Now, use the market size calculated in the prior step and the formula determined above for the market$-$share variance.

The actual market share would need to be

$0$

$0\mathrm{.}24$

$0\mathrm{.}40$

$0\mathrm{.}6$

$0\mathrm{.}76$

$1$

$1\mathrm{.}1$

in order for the market$-$share variance to equal $$0.$

While the market sharethe overallthe overallin the total market size results in a$($n$)$in the total market size results in a$($n$)$sales$-$quantity variance of $sales$-$quantity variance of $$.$Using the formula that you determined above for the market$-$size variance, the actual market$-$size would need to beunits for there to be no variance.The actual market share would need to bein order for the market$-$share variance to equal $$0.$

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Budgeted data

Budgeted Operating Data, Third Quarter $2022$

Selling

Variable Cost

Contribution

Sales Volume

Contribution

Price

per Unit

Margin per Unit

in Units

Dollars

SlatePro

$$381$

$$178$

$$203$

$10,170$

$$2,064,510$

Slate

$276$

$99$

$177$

$48,590$

$8,600,430$

SlateLite

$141$

$65$

$76$

$54,240$

$4,122,240$

$113,000$

$$14,787,180$

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Actual data

Actual Operating Data, Third Quarter $2022$

Selling

Variable Cost

Contribution

Sales Volume

Contribution

Price

per Unit

Margin per Unit

in Units

Dollars

SlatePro

$$350$

$$179$

$$171$

$11,550$

$$1,975,050$

Slate

$283$

$94$

$189$

$40,950$

$7,739,550$

SlateLite

$102$

$72$

$30$

$52,500$

$1,575,000$

$105,000$

$$11,289,600$

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Required

$1.$

Calculate the market$-$share and market$-$size variances for CSI in the third quarter of $2022($calculate all variances in terms of contribution margins$).$

$2.$

Explain what happened based on the market$-$share and market$-$size variances.

$3.$

Calculate the actual market size, in units, that would have led to no market$-$size variance $($again using budgeted contribution margin per unit$).$ Use this market$-$size figure to calculate the actual market share that would have led to a zero market$-$share variance.

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