Company A manufactures two modular types of doors: one for the residential market, and the other for the office market. Budgeted and actual operating data for the year 2018 are:Static BudgetResidentialOfficeTotalNumber of chairs sold260,000140,000400,000Contribution margin$26,000,000$11,200,000$37,200,000 Actual ResultsResidentialOfficeTotalNumber of chairs sold248,400165,600414,000Contribution margin$22,356,000$13,248,000$35,604,000Required: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.

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Answered: Compute the total static-budget…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 7P: Preparing a performance report Use the flexible budget prepared in P7-6 for the 31,000-unit level...

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Company A manufactures two modular types of doors: one for the residential market, and the other for the office market. Budgeted and actual operating data for the year 2018 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.

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

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