The Vargas Company had the following expectations for the year:
$$\begin{array} { | l | r | }
\hline \text { Total market for the product } & 175,000 \text { units } \
\text { XYZ's budgeted sales } & \$ 1,763,125 \
\hline \text { Variable costs per unit } & \$ 18.75 \
\hline \text { Selling price per unit } & \$ 32.50 \
\hline \text { Actual results for the year vere: } & \
\hline \text { Total market for the product } & 166,250 \text { units } \
\hline \text { XYZ's actual sales } & 56,525 \
\hline \text { Total Variable costs } & \$ 1,073,975 \
\hline \text { Total sales } & \$ 1,752,275 \
\hline
\end{array}$$What is Vargas' market share variance?
A) $37,296.88.
B) $40,906.25.
C) $35,700.00.
D) $32,550.00.

Question

The Vargas Company had the following expectations for the year: 
$$\begin{array} { | l | r | } 
\hline \text { Total market for the product } & 175,000 \text { units } \
\text { XYZ's budgeted sales } & \$ 1,763,125 \
\hline \text { Variable costs per unit } & \$ 18.75 \
\hline \text { Selling price per unit } & \$ 32.50 \
\hline \text { Actual results for the year vere: } & \
\hline \text { Total market for the product } & 166,250 \text { units } \
\hline \text { XYZ's actual sales } & 56,525 \
\hline \text { Total Variable costs } & \$ 1,073,975 \
\hline \text { Total sales } & \$ 1,752,275 \
\hline
\end{array}$$What is Vargas' market share variance?
A) $37,296.88.
B) $40,906.25.
C) $35,700.00.
D) $32,550.00.

Quizplus · Accepted Answer

The market share variance is calculated as: (Actual market share - Budgeted market share) x Actual total market x Budgeted contribution margin per unit. The budgeted market share is 1,763,125 / (175,000 x 32.50) = 0.31. The actual market share is 56,525 / 166,250 = 0.34. The budgeted contribution margin per unit is 32.50 - 18.75 = 13.75. Therefore, the market share variance is (0.34 - 0.31) x 166,250 x 13.75 = $37,296.88.

The Vargas Company Had the Following Expectations for the Year