# 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...

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

Chapter
Section

### Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 18, Problem 32P
Textbook Problem
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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)

1.

To determine

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

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:

Contribution margin volume variance}=[(Actual quantity sold)(Budgeted quantity sold)×(Budgeted average unit contribution margin)]

Compute the contribution margin variance.

Contribution margin variance=(Actual contribution margin)(Budgeted contribution margin)=$797,500$878,700=$81,200 Unfavorable Since, the budgeted contribution margin is more than the actual contribution margin; the contribution margin variance of$81,200 is unfavorable (U)

2.

To determine

Compute market share variance and market size variance.

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