Wheat Inc.has an exclusive contract with an exporter.Two brands of wheat are imported,labeled AB and CD.The following data are provided for the current fiscal year:
The total market was estimated to 40,000 bushels at the time of budget.The actual total market for the year is 32,000 bushels.
What is the firm's market size variance?
A)$6,000 unfavorable.
B)$750 unfavorable.
C)$4,000 unfavorable.
D)$17,500 unfavorable.
E)$0.

Question

Wheat Inc.has an exclusive contract with an exporter.Two brands of wheat are imported,labeled AB and CD.The following data are provided for the current fiscal year: 
The total market was estimated to 40,000 bushels at the time of budget.The actual total market for the year is 32,000 bushels.
What is the firm's market size variance?
A)$6,000 unfavorable. 
B)$750 unfavorable. 
C)$4,000 unfavorable. 
D)$17,500 unfavorable. 
E)$0.

Quizplus · Accepted Answer

Market size variance = (Actual market size - Budgeted market size) x Budgeted price
= (32,000 - 40,000) x $0.10
= -$8,000 x $0.10
= $800 unfavorable

Therefore, the correct answer is (C) $4,000 unfavorable.

Wheat IncHas an Exclusive Contract with an Exporter