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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.
Cornerstones of Cost Management (C...
Solutions
Cornerstones of Cost Management (C...
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.
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:
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.
Compute the contribution margin volume variance.
3.
Compute the sales mix variance.
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