Houston Infonautics senior vice president of marketing prepared his budget at the beginning of the third quarter

Houston Infonautics’ senior vice president of marketing prepared his budget at the beginning of the third quarter assuming a 25% market share based on total sales. Foolinstead Research estimated that the total handheld-organizer market would reach sales of 444,000 units worldwide in the third quarter. However, actual sales in the third quarter were 500,000 units.

Required
1. Calculate the market-share and market-size variances for Houston Infonautics in the third quarter of 2014 (calculate all variances in terms of contribution margins).
2. Explain what happened based on the market-share and market-size variances.
3. Calculate the actual market size, in units, that would have led to no market-size variance (again using budgeted contribution margin per unit). Use this market-size figure to calculate the actual market share that would have led to a zero market-sharevariance.

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Budgeted Operating Data, Third Quarter 2014 Selling Price 5380 274 146 Variable Cost per Unit $185 97 Contribution Margin per Unit $195 Sales Volume in Units 5,550 44,400 61,050 111,000 PalmPro PalmCE PalmKid 65 81 Actual Operating Data, Third Quarter 2014 Variable Cost per Unit $180 92 Sales Volume in Units 4,600 49,450 60,950 Contribution Margin per Unit PalmPro PalmCE PalmKid Selling Price $351 284 115 192 42 73 115