How would you interpret the last two variances? Choose the correct statement.

Question

BlackTom AI · Accepted Answer

To interpret the last two variances, I will evaluate what each option conveys about market dynamics and Chris’s performance, treating them as separate statements about market size, market share, and overall performance.
Option 1: 'The market size decreased and Chris lost market share, justifying the bad performance' — This claims a shrinking market size coupled with a loss of Chris’s market share. If the market actually contracted, a loss of share could be expected, but the phrase 'justifying the bad performance' assumes the decrease in market size is the primary driver. Depending on the data, a company could still perform poorly even in a shrinking market, yet this statement ties poor performance directly to a shrinking market without confirming both signals. It would be incorrect if the data showed market growth.
Option 2: 'The market grew but Chris lost market share, revealing a bad performance' — This asserts that overall market expansion occurred while Chris’s slice of the market shrank. This combination typically indicates that Chris underperformed relative to peers or the market, since even with a growing market, losing share points to relative weakness. This line-up aligns with a scenario where the company did not capitalize on market growth, signaling poor performance in spite of favorable market conditions.
Option 3: 'The market size decreased and Chris gained market share, showing a very good performance' — Here, a shrinking market size is paired with an increase in Chris’s share. While gaining share is positive, a decreasing market can still produce weak absolute results, and the wording 'very good performance' may overstate how much benefit is derived from a smaller market. This would be unlikely if the goal is strong overall performance, unless the gain in share translated into solid margins or volumes that offset the smaller market.
Option 4: 'The market share decreased, but market share increased, showing a bad performance' — This option presents an internal contradiction: it says market share decreased and market share increased, which cannot both be true for the same entity over the same period. From a logical standpoint, this option is incoherent and cannot accurately reflect the variances unless it was describing two different timeframes or segments, which the prompt does not indicate.
Option 5: 'The market grew and Chris gained market share, showing a good performance' — This describes simultaneous market growth and share gain. Such a combination typically signals strong performance, as the company not only benefited from a larger market but also strengthened its position within it. If the last two variances show this pattern, the interpretation would be positive overall.
Option 6: 'The market grew, but the market share decreased, justifying the bad performance' — This states that while the market expanded, Chris’s share declined. In many cases, that would underscore underperformance relative to the market, as the company did not keep up with overall growth, which can be perceived as negative despite a favorable market trend.
Overall, the analysis hinges on whether the data indicate growth or contraction in the market and whether Chris’s share rose or fell. The statements that describe market growth with a decline in Chris’s share (Option 2 or 6) point toward underperformance in a growing market, while statements describing growth with share gain (Option 5) point toward good performance. Conversely, a decrease in market size with corresponding share changes (Option 1 or 3) introduces complexity about absolute vs. relative performance, and an incoherent claim (Option 4) is not a viable interpretation. The most straightforward, internally consistent interpretation that matches a scenario of favorable market movement but weak company performance is the one where the market grows while Chris loses market share.
Note on coherence: ensure the actual variance data support these inferences. If the last two variances show growth in market size and a drop in Chris’s share, that aligns with Option 2. If they show growth in both market and share, that aligns with Option 5. If they show market shrinkage, the interpretation would shift accordingly. Regardless, statements claiming both market share gains and declines simultaneously (Option 4) are logically inconsistent and thus implausible.

ACCTMIS 3300 AU2025 (2004) Midterm 2

How would you interpret the last two variances? Choose the correct statement.

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