Sales Variances; Flexible-Budget Variance; Review of Chapter 14 Lau&Lau, Ltd., of Hong Kong manufacture two products for the same market. Its budget and operating results for the year just completed follow:
| Budget | Actual |
Unit of sales |
|
|
Product A | 30,000 | 35,000 |
Product B | 60,000 | 65,000 |
Contribution margin per unit |
|
|
Product A | $4.00 | $3.00 |
Product B | 10.00 | 12.00 |
Selling price per unit |
|
|
Product A | $10.00 | $12.00 |
Product B | 25.00 | 24.00 |
At the time of budget preparation, the budgeting department and sales department agreed that the industry volume for the year would likely be 1,500,000 units. Actual industry volume turned out to be 2,000,000 units.
Required (you may round fractions to three decimal places)
1. What is the average budgeted contribution margin per unit?
2. What is the sales volume contribution margin variance for each product?
3. What is the sales mix contribution margin variance for each product?
4. What is the sales quantity contribution margin variance for each product?
5. What is the market size contribution margin variance?
6. What is the market share contribution margin variance?
7. What is the total flexible budget contribution margin variance?
8. What is the total variable cost price variance if the total contribution margin price variance is $50,000 favorable?
9. What is the total variable cost efficiency variance if the total contribution margin price variance is $50,000 favorable?
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