14-28 (20 Min.) Market-Share and Market-Size Variances (Continuation of 14-27) - Actual Budgeted
14-28 (20 Min.) Market-Share and Market-Size Variances (Continuation of 14-27) - Actual Budgeted
14-28 (20 Min.) Market-Share and Market-Size Variances (Continuation of 14-27) - Actual Budgeted
Actual Budgeted
Western region 12.3 million 10 million
Soda King 1.23 million 1.25 million
Market share 10% 12.5%
Solution Exhibit 14-28 presents the sales-quantity variance, market-size variance, and market-
share variance for 2017.
= 1,121,250 F
The market share variance is unfavorable because the actual 10% market share was lower than
the budgeted 12.5% market share. The market size variance is favorable because the market size
increased 23% [(12,300,000 – 10,000,000) ÷ 10,000,000].
The unfavorable market-share variance was greater than the increase in market size variance
resulting in an unfavorable sales-quantity variance.
Sales-Quantity Variance
$78,000 U
14-13
Market-share variance Market-size variance
$1,199,250 U $1,121,250 F
14-14
14-35 (30 min.) Cost allocation to divisions.
1.
Bread Cake Doughnuts Total
Segment margin $6,400,000 $1,300,000 $6,150,000 $13,850,000
Allocated headquarter costs
($5,100,000 ÷ 3) 1,700,000 1,700,000 1,700,000 5,100,000
Operating income $4,700,000 $ (400,000) $4,450,000 $ 8,750,000
2.
Bread Cake Doughnuts Total
Segment margin $6,400,000 $1,300,000 $6,150,000 $13,850,000
Allocated headquarter costs,
Human resources1
(50%; 12.5%; 37.5% ×
$1,900,000) 950,000 237,500 712,500 1,900,000
14-15