Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 50

Market Size, Market Share, Working Backward Triple Delight is a foodstand located on a busy corner in the local business district. On average it sells three cheeseburgers and one fishwich for every four hamburgers sold. The following data were culled from its operation for 2010:

Total operating income variance
Hamburger	$18,000 Unfavorable
Cheeseburger	50,000 Favorable
Fishwich	10,000 Unfavorable
Sales quantity variance
Hamburger	14,000 Favorable
Cheeseburger	15,000 Favorable
Fishwich	1,000 Favorable
Sales mix variance
Hamburger	2,240 Unfavorable
Cheeseburger	4,800 Unfavorable
Fishwich	1,600 Favorable
Fixed costs variances	0
Market share variance	$96,000 Unfavorable
Market size variance	126,000 Favorable
Change in market share	4%
Fixed cost flexible budget variance	0

The estimated total volume for the foodstands in the region was 2,500,000 units. Consistent good weather pushed the total volume for the year to 4,000,000.

Required Determine the following:

1. Budgeted weighted-average contribution margin.

---

2. Budgeted and actual market shares.

---

3. Budget and actual total units sold.

---

4. Sales quantity variances for fishwich.

---

5. Budgeted contribution margin of each product.

---

6. Actual sales mix of each product.

---

7. Budget and actual units sold for each product.

Step 1 of 7

1.?Budget weighted average contribution margin (BWACM)

Market Share Variance ? $96,000 U BWACM

=Difference in market shares x Total actual market size x BWACM = 4% x 4,000,000 x BWACM = $0.60