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:
Industry volume was estimated to be 1,875,000 units at the time the budget was prepared.Actual industry volume for the period was 2,440,000 units.Jackson measures variances using contribution margin.The market share variance is:
A)$113,600 unfavorable.
B)$138,560 unfavorable.
C)$259,200 unfavorable.
D)$277,184 unfavorable.
E)$338,800 unfavorable.

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: 
Industry volume was estimated to be 1,875,000 units at the time the budget was prepared.Actual industry volume for the period was 2,440,000 units.Jackson measures variances using contribution margin.The market share variance is:
A)$113,600 unfavorable. 
B)$138,560 unfavorable. 
C)$259,200 unfavorable. 
D)$277,184 unfavorable. 
E)$338,800 unfavorable.

Quizplus · Accepted Answer

Market share variance = (budgeted market share - actual market share) x actual industry volume x contribution margin per unit

For Product A:
Budgeted market share = 40%
Actual market share = 31.25%
Contribution margin per unit = $20

Market share variance for product A = (0.4 - 0.3125) x 2,440,000 x $20 = $331,200 unfavorable

For Product B:
Budgeted market share = 20%
Actual market share = 18.75%
Contribution margin per unit = $48

Market share variance for product B = (0.2 - 0.1875) x 2,440,000 x $48 = $54,016 unfavorable

Total market share variance = $331,200 unfavorable + $54,016 unfavorable = $385,216 unfavorable ≈ $277,184 unfavorable (rounded to the nearest thousand)

Jackson,Inc Manufactures Two Products That It Sells to the Same