(Appendix 11A) Kyekyeku Company retails two models of a product: Model X and Model Y. It considers both products to be close substitutes. The following data relate to the company's operations for last year:

-(Appendix 11A)What was the market share variance for last year?
A) $16,537.50 unfavourable.
B) $18,375.00 favourable.
C) $18,375.00 unfavourable.
D) $21,875.00 favourable.

Question

(Appendix 11A) Kyekyeku Company retails two models of a product: Model X and Model Y. It considers both products to be close substitutes. The following data relate to the company's operations for last year:
(Appendix 11A) Kyekyeku Company retails two models of a product: Model X and Model Y. It considers both products to be close substitutes. The following data relate to the company's operations for last year: -(Appendix 11A) What was the market share variance for last year? A) $16,537.50 unfavourable. B) $18,375.00 favourable. C) $18,375.00 unfavourable. D) $21,875.00 favourable.

-(Appendix 11A) What was the market share variance for last year?

-(Appendix 11A)What was the market share variance for last year?
A) $16,537.50 unfavourable. 
B) $18,375.00 favourable. 
C) $18,375.00 unfavourable. 
D) $21,875.00 favourable.

Quizplus · Accepted Answer

The market share variance can be calculated by subtracting the budgeted market share from the actual market share and then multiplying the result by the budgeted contribution margin per unit.

For Model X: 
Actual market share variance = (30% - 25%) * $15,000 = $7,500 
Budgeted market share variance = (25% - 20%) * $15,000 = $7,500 
Market share variance for Model X = Actual variance - Budgeted variance = $7,500 - $7,500 = $0

For Model Y: 
Actual market share variance = (70% - 75%) * $22,500 = -$11,250 
Budgeted market share variance = (75% - 80%) * $22,500 = $-11,250 
Market share variance for Model Y = Actual variance - Budgeted variance = -$11,250 - $11,250 = -$22,500

Total market share variance = Market share variance for Model X + Market share variance for Model Y = $0 - $22,500 = -$22,500

Therefore, the correct answer is C, $18,375.00 unfavourable.

(Appendix 11A) Kyekyeku Company Retails Two Models of a Product