Page 4 - MAC4861_2 Unisa Test 4 slides - additional
P. 4

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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