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SOLUTION EXHIBIT 14-35

Market-Share and Market-Size Variance Analysis of Debbie’s Delight for August 2003

Static Budget: Actual Market SizeActual Market SizeBudgeted Market Size Actual Market Share Budgeted Market Share Budgeted Market Share Budgeted Average Budgeted Average Budgeted Average Contribution MarginContribution MarginContribution Margin Per UnitPer UnitPer Unit

960,000 0.125a $2.35b960,000 0.10c $2.35b1,000,000 0.10c $2.35b

$282,000$225,600$235,000

$56,400 F$9,400 U

Market-share varianceMarket-size variance

$47,000 F

Sales-quantity variance

F = favorable effect on operating income; U = unfavorable effect on operating income

aActual market share: 120,000 units ÷ 960,000 units = 0.125, or 12.5%

bBudgeted average contribution margin per unit: $235,000 ÷ 1,000,000 units = $2.35 per unit

cBudgeted market share: 100,000 units ÷ 1,000,000 units = 0.10, or 10%

An overview of Problems 14-34 and 14-35 is:

Sales-Volume Variance

$53,120 F

Market-Size Variance

$9,400 U

Market-Share Variance

$56,400 F

Sales-Mix Variance

$6,120 F

Sales-Quantity Variance

$47,000 F

14-49

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