Contribution Margin Variance

Iliff, Inc., produces and sells two types of countertop ovensthe toaster oven and the convection oven. Budgeted and actual data for the two models are shown below.

Budgeted Amounts:

		Toaster Oven		Convection Oven		Total
Sales:
($96 26,000)		$2,496,000
($151 17,500)				$2,642,500		$5,138,500
Variable expenses		450,000		820,000		1,270,000
Contribution margin		$2,046,000		$1,822,500		$3,868,500

Actual Amounts:

		Toaster Oven		Convection Oven		Total
Sales:
($82 25,000)		$2,050,000
($155 14,000)				$2,170,000		$4,220,000
Variable expenses		566,000		747,900		1,313,900
Contribution margin		$1,484,000		$1,422,100		$2,906,100

Required:

1. Calculate the contribution margin variance.

$fill in the blank 1

FavorableUnfavorable

2. What if actual units sold of the convection oven decreased? How would that affect the contribution margin variance?

It would become less unfavorable or more favorable.It would become more unfavorable or less favorable.

What if actual units sold of the convection oven increased? How would that affect the contribution margin variance?

It would become less unfavorable or more favorable.It would become more unfavorable or less favorable.