Page 15 - Manac Costing Test 2 class slides - 1. Standard Costing
P. 15
STANDARD COSTING
Market size variance
• Market size variance and market share variance
are two ways of using market data to determine
its effect on a company's profits. While the two
terms are related, they calculate the effects of
different changes.
• The market size variance can quantify the
effects of a change in market size on
profitability, assuming that the company's
market share stays the same. The formula for
calculating market size variance is:
Market size variance = ( Actual market size – Expected
market size) x Market share x Profit margin per unit
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