Twitter Company manufactures a remote control device for home theaters. The following data were from the operating period just completed: Actual market size (units) 19,000 Budgeted market size (units) 18,000 Actual market share 25 % Budgeted market share 22 % Budgeted selling price per unit $ 65 Actual selling price per unit $ 60 Budgeted variable cost per unit $ 39 Actual variable cost per unit $ 27 What is the firm's market size variance? Multiple Choice $8,420 favorable. $5,720 favorable. $4,560 favorable. $7,670 favorable. $8,120 favorable.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Twitter Company manufactures a remote control device for home theaters. The following data were from the operating period just completed:
| Actual market size (units) | 19,000 | |||
| Budgeted market size (units) | 18,000 | |||
| Actual market share | 25 | % | ||
| Budgeted market share | 22 | % | ||
| Budgeted selling price per unit | $ | 65 | ||
| Actual selling price per unit | $ | 60 | ||
| Budgeted variable cost per unit | $ | 39 | ||
| Actual variable cost per unit | $ | 27 | ||
What is the firm's market size variance?
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$8,420 favorable.
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$5,720 favorable.
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$4,560 favorable.
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$7,670 favorable.
-
$8,120 favorable.
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