Week 6 Quiz 2 Copy
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Question 1 of 3
1. Question
The sales department of HB is expected to sell the 75,000 litres of perfume at a cost per litre of € 20. At the end of the month, actual sales revenues are € 1,080,000, and the sales volume is 60,000 litres. While the sales department acknowledges that the volume fell short of the target, it claims that it actually did a decent job: it points to market research saying that the total market volume for the month was 340,000 litres instead of the budgeted 400,000 litres: ‘Actually, we did quite ok in a declining market’.
Calculate the sales price variance (flexible budget variance) and the sales volume variance.
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The sales price variance is and the sales volume variance is
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Question 2 of 3
2. Question
Calculate the market share variance and the market size variance
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The market share variance is and the market size variance is .
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Question 3 of 3
3. Question
Comment on the sales department’s remark. Did they do a good job? Why?
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Answer:
We got a lower price, this leads to an unfavorable variance.
We sold a lower volume, this also leads to an unfavorable variance.
In a declining market, we still lost market share.
So although the market development was not favorable, the sales department did even worse than the market.
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