Question 1

Managers can gain more insight about the static-budget variance by subdividing it into the flexible-budget variance and the sales-volume variance.

Accepted Answer

By subdividing the static-budget variance into the flexible-budget variance and the sales-volume variance, managers can gain more specific information about the sources of the variance and make informed decisions about how to address them.

Question 2

A favorable sales-mix variance arises when the actual sales-mix percentage exceeds the budgeted sales-mix percentage.

Accepted Answer

Yes, a favorable sales-mix variance occurs when the actual sales-mix percentage is higher than the budgeted sales-mix percentage. This means that the company is selling more of the products with higher profit margins, which leads to higher overall profits.

Question 3

The sales-mix variance can be explained in terms of the budgeted contribution margin per composite unit of the sales mix.

Accepted Answer

The sales-mix variance is the difference between the actual and budgeted profit resulting from a change in the relative proportions of products or services sold. It can be calculated by using the budgeted contribution margin per composite unit of the sales mix. Therefore, the statement is true.

Question 4

The sales mix variance is the difference between budgeted contribution margin for the actual sales mix and the budgeted contribution margin for the budgeted sales mix.

Accepted Answer

This statement is true. The sales mix variance compares the expected contribution margin for the sales mix that was actually achieved to the expected contribution margin for the sales mix that was budgeted.

Question 5

The sales-quantity variance is favorable when budgeted unit sales exceed actual unit sales.

Accepted Answer

The sales-quantity variance is favorable when actual unit sales exceed budgeted unit sales.

Question 6

Answer the following questions using the information below:
The Sarasota Corporation manufactures two types of vacuum cleaners, the Victor for commercial building use and the House-Mate for residences. Budgeted and actual operating data for the year 2012 were as follows:
  
-What is the total static-budget variance in terms of the contribution margin?
A)$900,000 favorable
B)$700,000 favorable
C)$200,000 unfavorable
D)$360,000 unfavorable

Accepted Answer

The answer of Answer the following questions using the information...

Question 7

Answer the following questions using the information below:
The Sarasota Corporation manufactures two types of vacuum cleaners, the Victor for commercial building use and the House-Mate for residences. Budgeted and actual operating data for the year 2012 were as follows:
  
-What is the total flexible-budget variance in terms of the contribution margin?
A)$900,000 favorable
B)$700,000 favorable
C)$200,000 unfavorable
D)$360,000 unfavorable

Accepted Answer

The answer of Answer the following questions using the information...

Question 8

Additional insight can be gained by dividing the sales-mix variance into the flexible-budget variance and the sales-volume variance.

Accepted Answer

The sales-mix variance is already a component of the sales-volume variance, and the flexible-budget variance is a separate analysis. Dividing the sales-mix variance into these components is not a standard practice.

Question 9

The Omega Corporation manufactures two types of vacuum cleaners: the ZENITH for commercial building use and the House-Helper for residences. Budgeted and actual operating data for the year 20X5 are as follows:
   Required:
Compute the sales-mix variance and the sales-quantity variance by type of vacuum cleaner, and in total. (in terms of the contribution margin)

Accepted Answer

The answer of The Omega Corporation manufactures two types of...

Question 10

Answer the following questions using the information below:
The Sarasota Corporation manufactures two types of vacuum cleaners, the Victor for commercial building use and the House-Mate for residences. Budgeted and actual operating data for the year 2012 were as follows:
  
-What is the total sales-mix variance in terms of the contribution margin?
A)$200,000 unfavorable
B)$360,000 unfavorable
C)$900,000 favorable
D)$1,260,000 favorable

Accepted Answer

The total sales-mix variance is calculated by comparing the actual sales mix to the budgeted sales mix, multiplied by the contribution margin. The given choice B of $360,000 unfavorable indicates that the actual sales mix resulted in a lower contribution margin than expected.

Question 11

The flexible-budget variance is the difference between an actual result and the flexible-budget amount based on the level of output actually achieved in the budget period.

Accepted Answer

This statement accurately describes the flexible-budget variance.

Question 12

Aromatic Coffee, Inc., sells two types of coffee, Colombian and Blue Mountain. The monthly budget for U.S. coffee sales is based on a combination of last year's performance, a forecast of industry sales, and the company's expected share of the U.S. market. The following information is provided for March:
    Budgeted and actual fixed corporate-sustaining costs are $60,000 and $72,000, respectively.
Required:
a. Calculate the actual contribution margin for the month.
b. Calculate the contribution margin for the static budget.
c. Calculate the contribution margin for the flexible budget.
d. Determine the total static-budget variance, the total flexible-budget variance, and the total sales-volume variance in terms of the contribution margin.

Accepted Answer

The answer of Aromatic Coffee, Inc., sells two types of...

Question 13

Answer the following questions using the information below:
The Sarasota Corporation manufactures two types of vacuum cleaners, the Victor for commercial building use and the House-Mate for residences. Budgeted and actual operating data for the year 2012 were as follows:
  
-What is the total sales-volume variance in terms of the contribution margin?
A)$900,000 favorable
B)$1,260,000 favorable
C)$200,000 unfavorable
D)$360,000 unfavorable

Accepted Answer

The total sales-volume variance is the difference between the actual sales volume and the budgeted sales volume, multiplied by the contribution margin per unit. In this case, the actual sales volume is 100,000 units, the budgeted sales volume is 90,000 units, and the contribution margin per unit is $10. Therefore, the total sales-volume variance is (100,000 - 90,000) * $10 = $1,000,000. Since the actual sales volume is greater than the budgeted sales volume, the variance is favorable.

Question 14

A composite unit is a hypothetical unit with weights based on the mix of individual units.

Accepted Answer

This statement is true. A composite unit is a weighted average of individual units that takes into account their respective mixes in a given situation. It is often used in finance to calculate investment returns and currency exchange rates, among other applications.

Question 15

Answer the following questions using the information below:
The Sarasota Corporation manufactures two types of vacuum cleaners, the Victor for commercial building use and the House-Mate for residences. Budgeted and actual operating data for the year 2012 were as follows:
  
-What is the total sales-quantity variance in terms of the contribution margin?
A)$200,000 unfavorable
B)$900,000 favorable
C)$360,000 unfavorable
D)$1,260,000 favorable

Accepted Answer

The answer of Answer the following questions using the information...

Question 16

The Chair 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 2012 are:
   Required:
Compute the following variances in terms of contribution margin:
a. Compute the total static-budget variance, the total flexible-budget variance, and the total sales-volume variance.
b. Compute the sale-mix variance and the sales-quantity variance by type of chair, and in total.

Accepted Answer

The answer of The Chair Company manufactures two modular types...

Question 17

The static-budget variance is the difference between an actual result and a budgeted amount in the static budget.

Accepted Answer

The static-budget variance is indeed the difference between an actual result and a budgeted amount in the static budget.

Question 18

Richard's Electronics manufactures TVs and DVDRs. During April, the following activities occurred:
  Required:
Compute the following variances in terms of the contribution margin.
a. Determine the total sales-mix variance.
b. Determine the total sales-quantity variance.
c. Determine the total sales-volume variance.

Accepted Answer

The answer of Richard's Electronics manufactures TVs and DVDRs. During...

Question 19

The Omega Corporation manufactures two types of vacuum cleaners: the ZENITH for commercial building use and the House-Helper for residences. Budgeted and actual operating data for the year 20X5 are as follows:
   Required:
a. Calculate the contribution margin for the flexible budget.
b. Determine the total static-budget variance, the total flexible-budget variance, and the total sales-volume variance in terms of the contribution margin.

Accepted Answer

The answer of The Omega Corporation manufactures two types of...

Question 20

The sales quantity variance is the difference between budgeted contribution margin based on actual units sold of all products at the budgeted mix, and contribution margin in the flexible budget.

Accepted Answer

The definition of sales quantity variance is incorrect. The actual definition is: the difference between the flexible budget contribution margin and the budgeted contribution margin based on actual units sold of all products at the actual mix.

Quiz 14: Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Managers can gain more insight about the static-budget variance by subdividing it into the flexible-budget variance and the sales-volume variance.

A favorable sales-mix variance arises when the actual sales-mix percentage exceeds the budgeted sales-mix percentage.

The sales-mix variance can be explained in terms of the budgeted contribution margin per composite unit of the sales mix.

The sales mix variance is the difference between budgeted contribution margin for the actual sales mix and the budgeted contribution margin for the budgeted sales mix.

The sales-quantity variance is favorable when budgeted unit sales exceed actual unit sales.

Additional insight can be gained by dividing the sales-mix variance into the flexible-budget variance and the sales-volume variance.

The flexible-budget variance is the difference between an actual result and the flexible-budget amount based on the level of output actually achieved in the budget period.

A composite unit is a hypothetical unit with weights based on the mix of individual units.

The static-budget variance is the difference between an actual result and a budgeted amount in the static budget.

The sales quantity variance is the difference between budgeted contribution margin based on actual units sold of all products at the budgeted mix, and contribution margin in the flexible budget.