Question

The Fortise Corporation manufactures two types of vacuum cleaners, the Victor for commercial building use and the House-Mate for residences. Budgeted and actual operating data for the year 2017 were as follows:

Static Budget                                         Victor            House-Mate                  Total

        Number sold                                    6,000    24,000               30,000

        Contribution margin           $1,560,000                $3,120,000       $4,680,000

        Actual Results                              Victor            House-Mate                  Total

        Number sold                                     5500   39,000               44,500

        Contribution margin           $1,400,000                $4,130,000 $5,530,000

What is the total sales-mix variance in terms of the contribution margin? (Round any intermediary calculations two decimal places.)

	A.	$312,000 favorable
	B.	$462,800 unfavorable
	C.	$925,600 unfavorable
	D.	$1,237,600 favorable

Answer 1

Standard Contribution Margin Per unit
	Victor	House-Mate
Contribution margin	1560000	3120000
Number sold	6000	24000
Standard Contibution Margin Per unit	260	130
Standard Mix
	Victor	House-Mate	Total
Budgeted Units	6000	24000	30000
Actual Units	5500	39000	44500
Standard Mix (44500/30000*a)	8900	35600	44500
sales-mix variance = Contribution Margin * ( Actual Mix - standard Mix )
	Victor	House-Mate	Total
Standard Contibution Margin Per unit	260	130
Standard Mix	8900	35600
Actual Mix	5500	39000
Sales Mix Variance	-884000	442000	-442000
The Correct Option Would be B = $442000 (Unfavorable)
The answer mentioned in the options is different due to rounding off.