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Sulert, Inc., produces and sells gel-filled ice packs. Sulert’s performance report for April follows: Required: 1. Calculate the contribution margin variance and the contribution margin volume variance. 2. Calculate the market share variance and the market size variance. (CMA adapted)
Cornerstones of Cost Management (C...
Solutions
Cornerstones of Cost Management (C...
Sulert, Inc., produces and sells gel-filled ice packs. Sulert’s performance report for April follows:
Required:
- 1. Calculate the contribution margin variance and the contribution margin volume variance.
- 2. Calculate the market share variance and the market size variance. (CMA adapted)
1.
Determine the contribution margin variance, and contribution margin volume 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 volume variance: Contribution margin volume variance reflects difference between the actual quantity sold and the budgeted quantity sold multiplied by the budgeted average unit contribution margin. It is computed using the given formula:
Compute the contribution margin variance.
Since, the budgeted contribution margin is more than the actual contribution margin; the contribution margin variance of $81,200 is unfavorable (U)
2.
Compute market share variance and market size variance.
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