Question

Jackson, Inc., manufactures two products that it sells to the same market. Excerpted below are its budgeted and actual operating results for the year just completed:

	Budget			Actual
Unit sales
Product X		32,000			80,000
Product Y		80,500			42,000
Unit contribution margin
Product X	$	4.80		$	3.90
Product Y	$	13.00		$	14.00
Unit selling price
Product X	$	13.00		$	14.00
Product Y	$	30.00		$	29.00

Industry volume was estimated to be 1,400,000 units at the time the budget was prepared. Actual industry volume for the period was 1,680,000 units. Jackson measures variances using contribution margin.

The market share variance is: (Round percentage answers to nearest whole percent and other values to 2 decimal places.)

Multiple Choice

• $73,400 unfavorable.

• $89,550 unfavorable.

• $167,300 unfavorable.

• $179,256 unfavorable.

• $218,700 unfavorable.

Answer 1

Answer d. 179256 U

Explanation:

Market share variance=Actual market size in units * (actual market share-budgeted mkt share)*budgeted cont margin per composite unit
	budgeted	actual
Unit sales
X	32000	80000
Y	80500	42000
total	112500	122000
volume estimated	1400000	1680000
	0.08	0.07
wegihted budgeted contribution
	((32000*4.80)+(80500*13))/(32000+80500)
	$    10.67
so answer is
(0.07-0.08)*1680000*10.67=			179256	unfavourable