Contribution Margin Volume Variance

Ioannis 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:
($98 29,000)		$2,842,000
($147 13,500)				$1,984,500		$4,826,500
Variable expenses		485,000		720,000		1,205,000
Contribution margin		$2,357,000		$1,264,500		$3,621,500

Actual Amounts:

		Toaster Oven		Convection Oven		Total
Sales:
($83 25,500)		$2,116,500
($163 14,000)				$2,282,000		$4,398,500
Variable expenses		500,000		650,000		1,150,000
Contribution margin		$1,616,500		$1,632,000		$3,248,500

Required:

1. Calculate the budgeted average unit contribution margin. Round your answer to the nearest cent. Use rounded answer in subsequent computations.

$--- per 1 unit

2. Calculate the contribution margin volume variance.

$--- Unfavorable

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

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 volume variance?

It would become less unfavorable or more favorable.

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1. Budgeted CM/Budgeting units

2. (Actual quantity sold budgeting quantity sold ) x Budgeted average unit contribution margin

3. If everything else remains the same and you have fewer units, how will that impact total contribution margin?

If everything else remains the same and you have more units, how will that impact total contribution margin?

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