Sales mix contribution margin variance = Actual units of all products sold x (Actual sales-mix percentage Budgeted sales mix percentage) x Budgeted contribution margin per unit

Dryers = 42,000 x (0.21 0.20) x $275 = $115,500 F

Washers = 42,000 x (0.79 0.80) x $375 = $157,500 U

$42,000U

Sales quantity contribution margin variance = (Actual units of all products sold Budgeted units of all products sold) x Budgeted sales mix percentage x Budgeted contribution margin

Dryers = (42,000 50,000) x 0.20 x $275 = 440,000 U

Washers = (42,000 50,000) x 0.80 x $375 = 2,400,000 U

2,840,000 U

Market share contribution margin variance = Actual market size in units x (Actual market share Budgeted market share) x Budgeted contribution margin per composite unit for budgeted mix

Dryers = 35,280 x (0.25 0.20) x 55 = $97,020 F

Washers = 138,250 x (0.24 0.25) x 300 = $414,750 U

$317,730 U

Market size contribution margin variance = (Actual market size in units Budgeted market size in units) x Budgeted market share x Budgeted contribution margin per composite unit for budgeted mix

Dryers = (35,280-50,000) x 0.20 x 55 = $161,920 U

Washers = (138,250 160,000) x 0.25 x 300 = $1,631,250 U

$1,793,170 U

1. What are potential causes of variance?