Question

jarvis co. manufactures rfid chips for electronic equipment. the following information was collected during june. actual market size (units) 32,000 budgeted market size (units) 20,000 actual market share 34% budgeted market share 32% budgeted selling price per unit $12.00 actual selling price per unit $10.50 budgeted per unit $4.00 actual per unit $3.00 what is the company's market-share variance?

Answer 1

The company's market-share variance is calculated by finding the difference in the expected revenue based on the budgeted and actual market shares, then multiplying that by the budgeted selling price per unit. For Jarvis Co., the market-share variance is $53,760 favorable.

Step-by-step explanation:

The market-share variance calculates the difference in expected revenue based on the budgeted market share and the actual market share achieved by the company. To calculate the market-share variance for Jarvis Co., we compare the expected units sold at the actual market size based on the budgeted market share to the actual units sold at the actual market size based on the actual market share, and multiply the difference by the budgeted selling price per unit.

The expected units sold based on the budgeted market share is 20,000 units (budgeted market size) × 32% (budgeted market share) = 6,400 units. The actual units sold based on the actual market share is 32,000 units (actual market size) × 34% (actual market share) = 10,880 units. Thus, the market-share variance is (10,880 units - 6,400 units) × $12.00 (budgeted selling price per unit) = $53,760 favorable since the actual units sold were higher than expected.