   # Gasconia Company produces three models of a product. Actual results from last year are as follows: Gasconia 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. ### Cornerstones of Cost Management (C...

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

#### Solutions

Chapter
Section ### 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: Gasconia 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.

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:

 Particulars Model 1 Model 2 Model 3 Total 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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