When actual variable cost per unit equals standard variable cost per unit, the difference between actual and budgeted contribution margin is explained by a combination of which two variances?
A)The sales-volume variance and the ﬁxed-overhead volume variance.
B)The sales-volume variance and the ﬁxed-overhead budget variance.
C)The sales-price variance and the ﬁxed-overhead volume variance.
D)The sales-price variance and sales-volume variance.
E)The sales-price variance and ﬁxed-overhead budget variance.

Question

Quizplus · Accepted Answer

When actual variable cost per unit equals standard variable cost per unit, the difference between actual and budgeted contribution margin can be explained by the sales-price variance and the sales-volume variance. The sales-price variance is the difference between the actual selling price per unit and the budgeted selling price per unit, while the sales-volume variance is the difference between the actual number of units sold and the budgeted number of units sold. These two variances together can explain the difference in contribution margin. The other options either include fixed overhead variances or budget variances, which are not applicable in this scenario.

When Actual Variable Cost Per Unit Equals Standard Variable Cost