Cost Management
Cost Management
8th Edition
ISBN: 9781259917028
Author: BLOCHER, Edward
Publisher: Mcgraw-hill Education,
Question
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Chapter 16, Problem 40E

1.

To determine

Prepare a flexible-budget contribution income statement for Qtr. 2, showing the Qtr. 2 results, the Qtr. 1 results, and the flexible budget.

1.

Expert Solution
Check Mark

Explanation of Solution

Prepare a flexible-budget contribution income statement for Qtr. 2, showing the Qtr. 2 results, the Qtr. 1 results, and the flexible budget:

Cost Management, Chapter 16, Problem 40E

Table (1)

2.

To determine

Calculate the sales volume variance for each product based both on sales dollars and contribution margin.

2.

Expert Solution
Check Mark

Explanation of Solution

Calculate the sales volume variance for each product based both on sales dollars and contribution margin:

Sales Volume Variance = Budgeted sales price×Change in Sales Volume

In sales Dollars:

Product S:

Sales Volume Variance = Budgeted sales price×Change in Sales Volume=[(0.2×12,000)(0.25×10,000)]×$35=$3,500U

Product M:

Sales Volume Variance = Budgeted sales price×Change in Sales Volume=[(0.80×12,000)(0.75×10,000)]×$90=$189,000F

In Contribution Margin:

Product S:

Sales Volume Variance = Budgeted sales price×Change in Sales Volume=[(0.2×12,000)(0.25×10,000)]×($35$22)=$1,300U

Product M:

Sales Volume Variance = Budgeted sales price×Change in Sales Volume=[(0.80×12,000)(0.75×10,000)]×($90$48)=$88,200U

3.

To determine

Compute the sales mix variance, and the sales quantity variance for each product, based on contribution margin.

3.

Expert Solution
Check Mark

Explanation of Solution

Compute the sales mix variance, and the sales quantity variance for each product, based on contribution margin:

Sales Mix Variance:

Product S:

(Sales Mix Variance) = [(Actual sales mix of the product) – (budgeted sales mix of the product)]×(Total units sold)×(Budgeted contribution margin per unit of the product)=(0.20.25)×12,000×($35$22)=$7,800U

Product M:

(Sales Mix Variance) = [(Actual sales mix of the product) – (budgeted sales mix of the product)]×(Total units sold)×(Budgeted contribution margin per unit of the product)=(0.80.75)×12,000×($90$48)=$25,200F

Sales Quantity Variance:

Product S:

(Sales Quantity Variance) = [(Total units of all products sold) – (Budgeted total units of allproducts)]×(Budgetedsales mix of theproduct)×(Budgeted contribution margin per unit of the product)=(12,00010,000)×0.25×($35$22)=$6,500F

Product M:

(Sales Quantity Variance) = [(Total units of all products sold) – (Budgeted total units of allproducts)]×(Budgetedsales mix of theproduct)×(Budgeted contribution margin per unit of the product)=(12,00010,000)×0.75×($90$48)=$63,000F

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