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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 33P
Textbook Problem
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Gasconia Company produces three models of a product. Actual results from last year are as follows:

Chapter 18, Problem 33P, Gasconia Company produces three models of a product. Actual results from last year are as follows: , example  1

Gasconia had budgeted the following amounts:

Chapter 18, Problem 33P, Gasconia Company produces three models of a product. Actual results from last year are as follows: , 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:

ParticularsModel 1Model 2Model 3Total
Actual results:    
Sales: $141,700$89,080$32,810$263,590
Less: Variable expenses($49,050)($44,540)($13,510)($10,7100)
Actual Contribution margin$92,650$44,540<

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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