Variance analysis, sales-mix, and sales-quantity variances. Aussie Infonautics, Inc., produces hand- held Windows CE^TM__compatible organizers. Aussie Infonautics markets three different handheld models. PalmPro is a souped-up version for the executive on the go; PalmCE is a consumer-oriented version; and PalmKid is a stripped-down version for the young adult market. You are Aussie Infonautics’ senior vice president of marketing. The CEO has discovered that the total contribution margin came in lower than budgeted, and it is your responsibility to explain to him why actual results are different from the budget. Budgeted and actual operating data for the company’s third quarter of 2010 are as follows:

1. Compute the actual and budgeted contribution margins in dollars for each product and in total for the third quarter of 2010.

2. Calculate the actual and budgeted sales mixes for the three products for the third quarter of 2010.

3. Calculate total sales-volume, sales-mix, and sales-quantity variances for the third quarter of 2010. (Calculate all variances in terms of contribution margins.)

4. Given that your CEO is known to have temper tantrums, you want to be well prepared for this meeting. In order to prepare, write a paragraph or two comparing actual results to budgeted amounts.

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Budgeted Operating Data, Third Quarter 2010 Selling Price $379 Contribution Variable Cost Sales Volume in Units 12,500 per Unit $182 Margin per Unit $197 PalmPro PalmCE 37,500 50,000 269 98 171 PalmKid 149 65 84 100,000 Actual Operating Data, Third Quarter 2010 Selling Variable Cost Contribution Margin per Unit $171 Sales Volume in Units 11,000 per Unit S178 Price S349 PalmPro PalmCE 193 285 92 44,000 Palmkid 102 73 29 55,000 110,000