Question 26

PROBLEM 1 (15 Points). Show all of your work including computations.

A company manufactures two modular types of chairs: one for the residential market, and the other for the office market. Budgeted and actual operating data for the year 2020 are:

Static Budget..................Residential.................Office..................Total

Number of chairs sold...........520,000..............280,000.............800,000

Contribution margin........$52,000,000.......$22,400,000......$74,400,000

Contribution margin/unit.............$100.....................$80

Actual Results.................Residential................Office...................Total

Number of chairs sold...........496,800.............331,200..............828,000

Contribution margin........$44,712,000......$26,496,000.......$71,208,000

Contribution margin/unit...............$90....................$80

Required:

Compute the following variances in terms of contribution margin:

a. Compute the sales-mix variance and the sales-quantity variance by type of chair, and it total for both types of chairs combined.

b. Compute the total sales-volume variance.