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Show steps/work!!!!! Special Tea Products (STP) has an exclusive contract with Tea Distributors. Two brands of Teas areimported, Strong and Mild, and sold to retail

Show steps/work!!!!!

Special Tea Products (STP) has an exclusive contract with Tea Distributors. Two brands of Teas areimported, Strong and Mild, and sold to retail outlets. The monthly budget for the contract is based on acombination of last year's performance, a forecast of general industry sales, and the company'sexpected share of the Canadian market for imported Tea. The following information is provided for themonth of May:

Budgeted Strong Mild Actual Strong Mild
Price per kg $2.00 $3.00 $2.50 $2.50
Variable cost /kg 1.00 1.50 1.00 2.00
Cont. margin $1.00 $1.50 $1.50 $0.50
Sales (in kg) 2,000 1,500 1,700 1,800

Budgeted fixed costs are $1,750. Actual fixed costs are $2,000.

What is the STP sales-volume variance (contribution margin) for Strong tea?

a.

$900 unfavourable

b.

$600 unfavourable

c.

$300 unfavourable

d.

$600 favourable

e.

$900 favourable

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