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Answer the following questions using the information below:
The Corata Appliance Manufacturing Corporation manufactures two vacuum cleaners, the Standard and
the Super. The following information was gathered about the two products:
Standard Super
Budgeted sales in units 2,400 600
Budgeted selling price $600 $1,700
Budgeted contribution margin per unit $400 $1,050
Actual sales in units 2,800 1,200
Actual selling price $650 $1,680
34) What is the budgeted sales-mix percentage for the Standard and the Super vacuum cleaners,
respectively?
A) 0.80 and 0.20
B) 0.70 and 0.30
C) 0.20 and 0.80
D) 0.30 and 0.70
35) What is the total sales-volume variance in terms of the contribution margin?
A) $260,000 unfavorable
B) $260,000 favorable
C) $530,000 unfavorable
D) $790,000 favorable
36) What is the total sales-quantity variance in terms of the contribution margin?
A) $260,000 favorable
B) $790,000 favorable
C) $530,000 favorable
D) $290,000 favorable
37) What is the total sales-mix variance in terms of the contribution margin?
A) $290,000 favorable
B) $260,000 favorable
C) $530,000 favorable
D) $790,000 favorable
Answer the following questions using the information below:
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 2015 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 5,000 35,000 40,000
Contribution margin $1,400,000 $4,130,000 $5,530,000
38) What is the contribution margin for the flexible budget?
A) $1,250,000
B) $4,200,000
C) $5,250,000
D) $5,850,000
39) What is the total static-budget variance in terms of the contribution margin?
A) $900,000 favorable
B) $850,000 favorable
C) $250,000 unfavorable
D) $450,000 unfavorable
40) What is the total flexible-budget variance in terms of the contribution margin?
A) $900,000 favorable
B) $850,000 favorable
C) $320,000 unfavorable
D) $360,000 unfavorable
41) What is the total sales-volume variance in terms of the contribution margin?
A) $1,170,000 favorable
B) $1,260,000 favorable
C) $850,000 unfavorable
D) $320,000 unfavorable
42) What is the total sales-quantity variance in terms of the contribution margin?
A) $200,000 unfavorable
B) $540,000 favorable
C) $960,000 unfavorable
D) $1,560,000 favorable
43) What is the total sales-mix variance in terms of the contribution margin?
A) $200,000 unfavorable
B) $390,000 unfavorable
C) $900,000 favorable
D) $1,260,000 favorable
44) The static-budget variance is the difference between an actual result and the corresponding budgeted
amount in the static budget.
45) The flexible-budget variance is the difference between an actual result and the flexible-budget amount
based on the level of output actually achieved in the budget period.
46) Managers can gain more insight about the static-budget variance by subdividing it into the flexible-
budget variance and the sales-volume variance.
47) The market-share variance is the difference in budgeted contribution margin for actual
market size in units caused solely by actual market share being different from budgeted
market share.
48) Additional insight can be gained by dividing the sales-volume variance into the sales-mix variance
and the sales-quantity variance.
49) A favorable sales-mix variance arises when the actual sales-mix percentage exceeds the budgeted
sales-mix percentage.
50) A composite unit is a hypothetical unit with weights based on the mix of individual units.
51) The market-share variance is the difference in actual contribution margin for actual market size in
units caused solely by actual market share being different from budgeted market share.
52) The sales-mix variance can be explained in terms of the budgeted contribution margin per composite
unit of the sales mix.
53) The sales-quantity variance is favorable when budgeted unit sales exceed actual unit sales.
54) The sales-mix variance is the difference between budgeted contribution margin for the actual sales
mix and the budgeted contribution margin for the budgeted sales mix.
55) The sales quantity variance is the difference between budgeted contribution margin based on actual
units sold of all products at the budgeted mix, and contribution margin in the flexible budget.
56) Synor Coffee, Inc., sells two types of coffee, Colombian and Blue Mountain. The monthly budget for
U.S. coffee sales is based on a combination of last year's performance, a forecast of industry sales, and the
company's expected share of the U.S. market. The following information is provided for March:
Actual Budget
Colombian Blue Mountain Colombian Blue Mountain
Sales in pounds 15,000 lbs. 17,000 lbs. 13,500 lbs. 18,000 lbs
Price per pound $13.00 $16.00 $13.00 $16.00
Variable cost per pound 5.50 8.50 6.50 8.00
Contribution margin $7.50 $7.50 $6.50 $8.00
Budgeted and actual fixed corporate-sustaining costs are $60,000 and $72,000, respectively.
Required:
a. Calculate the actual contribution margin for the month.
b. Calculate the contribution margin for the static budget.
c. Calculate the contribution margin for the flexible budget.
d. Determine the total static-budget variance, the total flexible-budget variance, and the total sales-
volume variance in terms of the contribution margin.
57) Gevorg's Electronics manufactures TVs and DVDRs. During April, the following activities occurred:
TVs DVDRs
Budgeted units sold 19,404 72,996
Budgeted contribution margin per unit $40 $75
Actual units sold 22,000 80,000
Actual contribution margin per unit $45 $76
Required:
Compute the following variances in terms of the contribution margin.
a. Determine the total sales-mix variance.
b. Determine the total sales-quantity variance.
c. Determine the total sales-volume variance.
58) The Octova Corporation manufactures two types of vacuum cleaners: the ZENITH for commercial
building use and the House-Helper for residences. Budgeted and actual operating data for the year 20X5
are as follows:
Static Budget ZENITH House-Helper Total
Number sold 20,000 80,000 100,000
Contribution margin $4,600,000 $15,200,000 $19,800,000
Actual Results ZENITH House-Helper Total
Number sold 21,500 60,000 81,500
Contribution margin $6,665,000 $13,200,000 $19,865,000
Required:
a. Calculate the contribution margin for the flexible budget.
b. Determine the total static-budget variance, the total flexible-budget variance, and the total sales-
volume variance in terms of the contribution margin.
59) The Octova Corporation manufactures two types of vacuum cleaners: the ZENITH for commercial
building use and the House-Helper for residences. Budgeted and actual operating data for the year 20X5
are as follows:
Static Budget Zenith House-Helper Total
Number sold 20,000 80,000 100,000
Contribution margin $4,600,000 $15,200,000 $19,800,000
Actual Results Zenith House-Helper Total
Number sold 21,500 64,500 86,000
Contribution margin $6,665,000 $14,190,000 $20,855,000
Required:
Compute the sales-mix variance and the sales-quantity variance by type of vacuum cleaner, and in total.
(in terms of the contribution margin)
46
60) The Chair Company manufactures two modular types of chairs: one for the residential market, and
the other for the office market. Budgeted and actual operating data for the year 2015 are:
Static Budget Residential Office Total
Number of chairs sold 260,000 140,000 400,000
Contribution margin $26,000,000 $11,200,000 $37,200,000
Actual Results Residential Office Total
Number of chairs sold 248,400 165,600 414,000
Contribution margin $22,356,000 $13,248,000 $35,604,000
Required:
Compute the following variances in terms of contribution margin:
a. Compute the total static-budget variance, the total flexible-budget variance, and the total sales-
volume variance.
b. Compute the sale-mix variance and the sales-quantity variance by type of chair, and in total.
61) What are the two components of the sales-volume variance?
62) What are the two components of the sales-quantity variance?
