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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: Haysbert had budgeted the following amounts: Required: 1. Calculate the contribution margin variance. 2. Calculate the contribution margin volume variance. 3. Calculate the sales mix variance.

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

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BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 18, Problem 31P
Textbook Problem
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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:

Chapter 18, Problem 31P, Haysbert Company provides management services for apartments and rental units. In general, Haysbert , example  1

Haysbert had budgeted the following amounts:

Chapter 18, Problem 31P, Haysbert Company provides management services for apartments and rental units. In general, Haysbert , example  2

Required:

  1. 1. Calculate the contribution margin variance.
  2. 2. Calculate the contribution margin volume variance.
  3. 3. Calculate the sales mix variance.

1.

To determine

Compute the contribution margin variance.

Explanation of Solution

Contribution margin variance: Contribution margin variance reflects difference between the actual contribution margin and budgeted contribution margin. It is computed using the given formula:

Contribution margin variance=(Actual contribution margin)(Budgeted contribution margin)

Compute the contribution margin variance:

ParticularsBasicCompleteTotal
Actual results:   

Sales:

Basic:($85×2,000 units)

Complete:($240×400 units)

$280,000$120,000$400,000

Less: Variable expenses:

Basic:($85×2,000 units)

Complete:($240×400 units)

($170,000)($96,000)($226,000)
Actual Contribution margin$110,000<

2.

To determine

Compute the contribution margin volume variance.

3.

To determine

Compute the sales mix variance.

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Chapter 18 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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