Question

Problem 10 (10 points) The Sarasota Corporation manufactures two types of vacuum cleaners, the Victor for nmercial building use and the House-Mate for residences. Budgeted and actual operating data for the year 2012 were as follows Static Budget Number sold Contribution margin Total House Mate 20,000 $3,000,000 $4,500,000 Victor 25,000 5,000 $1,500,000 Actual Results umber sold Contribution margin Victor Total 32,000 $3,920,000 $5,200,000 House-Mate 4,000 $1,280,000 What is the contribution margin for the flexible budget? A) $1,200,000 B) $4,200,000 C) $5,200,000 D) $5,400,000 What is the total static-budget variance in terms of the contribution margin? A) $900,000 favorable B) $700,000 favorable C) $200,000 unfavorable D) $360,000 unfavorable What is the total flexible-budget variance in terms of the contribution margin? A) $900,000 favorable B) $700,000 favorable C) $200,000 unfavorable D) $360,000 unfavorable What is the total sales-volume variance in terms of the contribution margin? A) $900,000 favorable B) $1,260,000 favorable C) $200,000 unfavorable D) $360,000 unfavorable What is the total sales-quantity variance in terms of the contribution margin? A) $200,000 unfavorable B) $900,000 favorable C) $360,000 unfavorable D) $1,260,000 favorable AACSB: Analytical skills What is the total sales-mix variance in terms of the contribution margin? A) $200,000 unfavorable B) $360,000 unfavorable C) $900,000 favorable D) $1,260,000 favorable

Answer 1

Ans 1	in $
Contribution margin for flexible budget
Option D	5400000
	Victor	House mate	Total
Contribution margin per unit C	300	150
	(1500000/5000)	(3000000/20000)
Actual results A	4000	28000
Contribution margin for flexible budget	1200000	4200000	5400000
C*A
ans 2
Option B $700000 favorable
Total static budget varaince of contribution margin
Static CM	4500000
Actual CM	$5,200,000
	($700,000)	F
ans 3
Total flexible budget varaince of contribution margin
Flexible CM	5400000
Actual CM	$5,200,000
	$200,000	U
Option C $200000 Unfavorable
ans 4
Sales volume varaince
(4000-5000)*300	-300000
(28000-20000)*150	1200000
	900000	Favorable
Option A $900000 Favorable
ans 5 Sales qty variance
1260000 F
(32000-25000)*1/5*300	420000
(32000-25000)*4/5*150	840000
	1260000
Sales mix varaince
Option B $360000 U
Victor 32000-(1/8-1/5)*300	-720000
House amte 32000-(7/8-4/5)*1500	360000
	-360000