Question
Contribution Margin Volume Variance Iliff, Inc., produces and sells two types of countertop ovensthe toaster oven and the convection oven. Budgeted and actual data for
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Contribution Margin Volume 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: ($100 29,500) $2,950,000 ($149 14,500) $2,160,500 $5,110,500 Variable expenses 460,000 800,000 1,260,000 Contribution margin $2,490,000 $1,360,500 $3,850,500
Actual Amounts:
Toaster Oven Convection Oven Total Sales: ($82 25,000) $2,050,000 ($157 13,500) $2,119,500 $4,169,500 Variable expenses 570,400 658,900 1,229,300 Contribution margin $1,479,600 $1,460,600 $2,940,200
Required:
1. Calculate the budgeted average unit contribution margin. Round your answer to the nearest cent. Use rounded answer in subsequent computations. $ per unit
2. Calculate the contribution margin volume variance.
$
3. What if actual units sold of the convection oven decreased? How would that affect the contribution margin volume variance?
What if actual units sold of the convection oven increased? How would that affect the contribution margin volume variance?
Contribution Margin Volume 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: | ||||||
($100 29,500) | $2,950,000 | |||||
($149 14,500) | $2,160,500 | $5,110,500 | ||||
Variable expenses | 460,000 | 800,000 | 1,260,000 | |||
Contribution margin | $2,490,000 | $1,360,500 | $3,850,500 |
Actual Amounts:
Toaster Oven | Convection Oven | Total | ||||
Sales: | ||||||
($82 25,000) | $2,050,000 | |||||
($157 13,500) | $2,119,500 | $4,169,500 | ||||
Variable expenses | 570,400 | 658,900 | 1,229,300 | |||
Contribution margin | $1,479,600 | $1,460,600 | $2,940,200 |
Required:
1. Calculate the budgeted average unit contribution margin. Round your answer to the nearest cent. Use rounded answer in subsequent computations. $ per unit
2. Calculate the contribution margin volume variance.
$
3. What if actual units sold of the convection oven decreased? How would that affect the contribution margin volume variance?
What if actual units sold of the convection oven increased? How would that affect the contribution margin volume variance?
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