Problem 18.31 Contribution Margin Variance, Contribution Margin Volume Variance,
ID: 2462445 • Letter: P
Question
Problem 18.31
Contribution Margin Variance, Contribution Margin Volume Variance, Sales Mix Variance
Haysbert Company provides management services for apartments and rental units. In general, Haysbert packages its services into two groups: basic and complete. The basic package includes advertising vacant units, showing potential renters through them, and collecting monthly rent and remitting it to the owner. The complete package adds maintenance of units and bookkeeping to the basic package. Packages are priced on a per-rental unit basis. Actual results from last year are as follows:
Required:
1. Calculate the contribution margin variance.
$ - Select your answer -FavorableUnfavorableItem 2
2. Calculate the contribution margin volume variance. Round the budgeted average unit contribution margin to four decimal places. Round your final answer to the nearest cent.
$ - Select your answer -FavorableUnfavorableItem 4
3. Calculate the sales mix variance. Round the budgeted average unit contribution margin to four decimal places. Round your final answer to the nearest cent.
$ - Select your answer -FavorableUnfavorableItem 6
Problem 18.31
Contribution Margin Variance, Contribution Margin Volume Variance, Sales Mix Variance
Haysbert Company provides management services for apartments and rental units. In general, Haysbert packages its services into two groups: basic and complete. The basic package includes advertising vacant units, showing potential renters through them, and collecting monthly rent and remitting it to the owner. The complete package adds maintenance of units and bookkeeping to the basic package. Packages are priced on a per-rental unit basis. Actual results from last year are as follows:
Required:
1. Calculate the contribution margin variance.
$ - Select your answer -FavorableUnfavorableItem 2
2. Calculate the contribution margin volume variance. Round the budgeted average unit contribution margin to four decimal places. Round your final answer to the nearest cent.
$ - Select your answer -FavorableUnfavorableItem 4
3. Calculate the sales mix variance. Round the budgeted average unit contribution margin to four decimal places. Round your final answer to the nearest cent.
$ - Select your answer -FavorableUnfavorableItem 6
Explanation / Answer
Actual Budget Basic Complete Basic Complete Sales ( units) 2000 400 1950 460 Selling price 140 300 145 290 Variable expenses 85 240 90 242 Contribution 55 60 55 48 1) Contribution Margin variance = Actual Sales - ( units sold * budgeted unit price) = (2000 *140 + 400*000) - (2000*145 + 400*290) = (280000 + 120000) - ( 290000 + 116000) = 400000 - 406000 = -6000 UF 2) Contribution Margin volume variance = ( Actual units sold * bufdgeted contribution) - Budgeted contribution margin = ( 2000 *55 + 400 * 48) - ( 1950 * 55 + 460 * 48) = ( 110000 + 19200 ) - (107520 + 22080) = 129200 - 129330 = 130 UF 3) Contribution Mix variance = ( Actual units sold * actual contribution margin ) - ( Actual units sold * budgeted contribution) = ( 2000*55 + 400 * 60 ) - (2000*55 + 400*48) = (110000 + 24000) - ( 110000 + 19200) = 134000 - 129200 = 4800 F