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Calculating expected sales and market share variance

1- Excalibur corporation has developed a model to predict sales revenues for its line of beach towels and swimwear based on long-range weather forecasts. The probability of means temperature and related sales of product line units are as indicated below:
Unit sales Temperature Probability
10,000 75-79 5%
30,000 80-84 25
50,000 84-87 50
40,000 87-89 15
25,000 over 90 5
What sales volume in units would the Excalibur corporation anticipate using the expected value approach

A. 31,000
B. 40,000
C. 50,000
D. 155,000

2- Mo' Joe Coffee shops is concerned as to whether its brand name is working and wants to compute its market share variance to measure the effect of the company's market share on the company's contribution margin. He sold 90,000 units compared to budgeted 120,000 units in a market that regularly commands 500,000 units in sales. The budgeted contribution margin per unit is $.88 while the actual contribution margin achieved was %.56 per unit. The market share variance is

A. 26,400
B. (26,400)
C. 16,800
D. (16,800)

Solution Preview

1)
Unit sales Temperature Probability
10,000 75-79 5%
30,000 80-84 25
50,000 84-87 ...

Solution Summary

There are two problems. Solution to first problem describes the step to find out the expected sales. Solution to second problem determines the market share variance.

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