Problem 2.

31 Contribution Margin Variance, Contribution Margin Volume

Variance, Sales Mix Variance

Haysbert Company

Required:

1. Calculate the contribution margin variance.

Budgeted amounts:

Basic Complete Total

Sales:
(1,950 x $145) $282,750
(460 x $290) $133,400 $416,150
Less: Variable expenses (175,500) (111,320) (286,820)
Contribution margin $107,250 $22,080 $129,330

Actual amounts:

Basic Complete Total

Sales:
(2,000 x $140) $280,000
(400 x $300) $120,000 $400,000
Less: Variable expenses (170,000) (96,000) (266,000)
Contribution margin $110,000 $24,000 $134,000

Contribution Margin Variance = Annual contribution margin − Budgeted contribution

margin
Contribution Margin Variance = $134,000 – $129,330
Contribution Margin Variance = $4,670 F

2. Calculate the contribution margin volume variance.

Budgeted average unit contribution margin = Budgeted total contribution margin /

Budgeted total units
Budgeted average unit contribution margin = $129,330 / (1,950 + 460)
Budgeted average unit contribution margin = $53.66
Contribution Margin Volume Variance = (Actual quantity sold − Budgeted quantity
sold) × Budgeted average unit contribution
margin
Contribution Margin Volume Variance = [(2,000 + 400) – (1,950 + 460)] x $53.66
Contribution Margin Volume Variance = $536.60 U

3. Calculate the sales mix variance.

Sales mix variance = [(Product 1 actual units – Product 1 budgeted units) × (Product 1
budgeted unit contribution margin − Budgeted average unit
contribution margin] + [(Product 2 actual units − Product 2
budgeted units) × (Product 2 budgeted unit contribution margin −
Budgeted average unit contribution margin]
Sales mix variance = [(2,000 – 1,950) x ($55.00 - $53.66)] + [(400 – 460) x ($48.00 -
$53.66)]
Sales mix variance = $67 + $339.60
Sales mix variance = $406.60 F