Question 1

Answer the following questions using the information below:
The Fortise 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 2015 were as follows:
 $$\begin{array}{l}
\begin{array} { l r r r } 
\text { Static Budget } & \text { Victor } & \text { House-Mate } & \text { Total } \
\hline \text { Number sold } & 6,000 & 24,000 & 30,000\
\text { Contribution margin } &\$ 1,560,000 & \$ 3,120,000 &\$ 4,680,000\\
\text { Actual Results } & \text { Victor } & \text { House-Mate } & \text { Total } \
\text { Number sold } & 5,000 & 35,000 & 40,000 \
\text { Contribution margin } & \$ 1,400,000 & \$ 4,130,000 & \$ 5,530,000
\end{array}
\end{array}$$
-What is the contribution margin for the flexible budget?
A) $1,250,000
B) $4,200,000
C) $5,250,000
D) $5,850,000

Accepted Answer

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

Question 2

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

This statement is true. The static-budget variance is the difference between the actual results and the budgeted amounts. By analyzing this variance, it can be further broken down into the flexible-budget variance (the difference between the actual results and the flexible budget based on actual sales volume) and the sales-volume variance (the difference between the flexible budget and the static budget based on expected sales volume). This can provide managers with more insight into the reasons behind the variance and help them make better decisions in the future.

Question 3

Answer the following questions using the information below:
The Corata Appliance Manufacturing Corporation manufactures two vacuum cleaners, the Standard and the Super. The following information was gathered about the two products:
 $\begin{array}{lrr}&\text { Standard }&\text { Super }\
\text { Bud geted sales in units } & 2,400 & 600 \
\text { Bud geted selling price } & \$ 600 & \$ 1,700 \
\text { Bud geted contribution margin per unit } & \$ 400 & \$ 1,050 \
\text { Actual sales in units } & 2,800 & 1,200 \
\text { Actual selling price } & \$ 650 & \$ 1,680
\end{array}$
-What is the total sales-mix variance in terms of the contribution margin?
A) $290,000 favorable
B) $260,000 favorable
C) $530,000 favorable
D) $790,000 favorable

Accepted Answer

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

Question 4

Answer the following questions using the information below:
The Corata Appliance Manufacturing Corporation manufactures two vacuum cleaners, the Standard and the Super. The following information was gathered about the two products:
 $\begin{array}{lrr}&\text { Standard }&\text { Super }\
\text { Bud geted sales in units } & 2,400 & 600 \
\text { Bud geted selling price } & \$ 600 & \$ 1,700 \
\text { Bud geted contribution margin per unit } & \$ 400 & \$ 1,050 \
\text { Actual sales in units } & 2,800 & 1,200 \
\text { Actual selling price } & \$ 650 & \$ 1,680
\end{array}$
-What is the total sales-quantity variance in terms of the contribution margin?
A) $260,000 favorable
B) $790,000 favorable
C) $530,000 favorable
D) $290,000 favorable

Accepted Answer

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

Question 5

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

Accepted Answer

This is true. A composite unit is created by combining different individual units based on the weights assigned to each unit.

Question 6

The market-share variance is the difference in budgeted contribution margin for actual
market size in units caused solely by actual market share being different from budgeted
market share.

Accepted Answer

This is the correct definition of market-share variance.

Question 7

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

Accepted Answer

This statement is true. The sales-volume variance can be broken down into the sales-mix variance (the effect of changes in the proportion of products sold) and the sales-quantity variance (the effect of changes in the number of units sold). This breakdown can provide further insight into the reasons behind changes in overall sales volume.

Question 8

Answer the following questions using the information below:
The Fortise 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 2015 were as follows:
 $$\begin{array}{l}
\begin{array} { l r r r } 
\text { Static Budget } & \text { Victor } & \text { House-Mate } & \text { Total } \
\hline \text { Number sold } & 6,000 & 24,000 & 30,000\
\text { Contribution margin } &\$ 1,560,000 & \$ 3,120,000 &\$ 4,680,000\\
\text { Actual Results } & \text { Victor } & \text { House-Mate } & \text { Total } \
\text { Number sold } & 5,000 & 35,000 & 40,000 \
\text { Contribution margin } & \$ 1,400,000 & \$ 4,130,000 & \$ 5,530,000
\end{array}
\end{array}$$
-What is the total sales-volume variance in terms of the contribution margin?
A) $1,170,000 favorable
B) $1,260,000 favorable
C) $850,000 unfavorable
D) $320,000 unfavorable

Accepted Answer

The total sales-volume variance is the difference between the budgeted and actual contribution margins, which is $5,530,000 - $4,680,000 = $850,000. Since the actual contribution margin is greater than the budgeted contribution margin, the variance is favorable.

Question 9

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 10

Answer the following questions using the information below:
The Fortise 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 2015 were as follows:
 $$\begin{array}{l}
\begin{array} { l r r r } 
\text { Static Budget } & \text { Victor } & \text { House-Mate } & \text { Total } \
\hline \text { Number sold } & 6,000 & 24,000 & 30,000\
\text { Contribution margin } &\$ 1,560,000 & \$ 3,120,000 &\$ 4,680,000\\
\text { Actual Results } & \text { Victor } & \text { House-Mate } & \text { Total } \
\text { Number sold } & 5,000 & 35,000 & 40,000 \
\text { Contribution margin } & \$ 1,400,000 & \$ 4,130,000 & \$ 5,530,000
\end{array}
\end{array}$$
-What is the total static-budget variance in terms of the contribution margin?
A) $900,000 favorable
B) $850,000 favorable
C) $250,000 unfavorable
D) $450,000 unfavorable

Accepted Answer

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

Question 11

The market-share variance is the difference in actual contribution margin for actual market size in units caused solely by actual market share being different from budgeted market share.

Accepted Answer

The market-share variance is the difference in budgeted contribution margin for actual
market size in units caused solely by actual market share being different from budgeted
market share.

Question 12

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

The definition provided correctly describes the sales-mix variance.

Question 13

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 is a correct definition of the flexible-budget variance.

Question 14

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 can be calculated by comparing the actual sales mix to the budgeted sales mix and determining the difference in the contribution margin per composite unit of the sales mix. Therefore, the sales-mix variance can be explained in terms of the budgeted contribution margin per composite unit of the sales mix.

Question 15

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 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 static budget.

Question 16

Answer the following questions using the information below:
The Fortise 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 2015 were as follows:
 $$\begin{array}{l}
\begin{array} { l r r r } 
\text { Static Budget } & \text { Victor } & \text { House-Mate } & \text { Total } \
\hline \text { Number sold } & 6,000 & 24,000 & 30,000\
\text { Contribution margin } &\$ 1,560,000 & \$ 3,120,000 &\$ 4,680,000\\
\text { Actual Results } & \text { Victor } & \text { House-Mate } & \text { Total } \
\text { Number sold } & 5,000 & 35,000 & 40,000 \
\text { Contribution margin } & \$ 1,400,000 & \$ 4,130,000 & \$ 5,530,000
\end{array}
\end{array}$$
-What is the total sales-mix variance in terms of the contribution margin?
A) $200,000 unfavorable
B) $390,000 unfavorable
C) $900,000 favorable
D) $1,260,000 favorable

Accepted Answer

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

Question 17

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

Accepted Answer

A favorable sales-mix variance occurs when the actual sales-mix percentage is higher than the budgeted sales-mix percentage, meaning that more high-margin products are being sold than anticipated. This leads to greater profits and is considered favorable.

Question 18

Answer the following questions using the information below:
The Fortise 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 2015 were as follows:
 $$\begin{array}{l}
\begin{array} { l r r r } 
\text { Static Budget } & \text { Victor } & \text { House-Mate } & \text { Total } \
\hline \text { Number sold } & 6,000 & 24,000 & 30,000\
\text { Contribution margin } &\$ 1,560,000 & \$ 3,120,000 &\$ 4,680,000\\
\text { Actual Results } & \text { Victor } & \text { House-Mate } & \text { Total } \
\text { Number sold } & 5,000 & 35,000 & 40,000 \
\text { Contribution margin } & \$ 1,400,000 & \$ 4,130,000 & \$ 5,530,000
\end{array}
\end{array}$$
-What is the total flexible-budget variance in terms of the contribution margin?
A) $900,000 favorable
B) $850,000 favorable
C) $320,000 unfavorable
D) $360,000 unfavorable

Accepted Answer

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

Question 19

Answer the following questions using the information below:
The Fortise 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 2015 were as follows:
 $$\begin{array}{l}
\begin{array} { l r r r } 
\text { Static Budget } & \text { Victor } & \text { House-Mate } & \text { Total } \
\hline \text { Number sold } & 6,000 & 24,000 & 30,000\
\text { Contribution margin } &\$ 1,560,000 & \$ 3,120,000 &\$ 4,680,000\\
\text { Actual Results } & \text { Victor } & \text { House-Mate } & \text { Total } \
\text { Number sold } & 5,000 & 35,000 & 40,000 \
\text { Contribution margin } & \$ 1,400,000 & \$ 4,130,000 & \$ 5,530,000
\end{array}
\end{array}$$
-What is the total sales-quantity variance in terms of the contribution margin?
A) $200,000 unfavorable
B) $540,000 favorable
C) $960,000 unfavorable
D) $1,560,000 favorable

Accepted Answer

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

Question 20

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

Accepted Answer

The definition of static-budget variance is accurately described as the difference between actual results and the corresponding amount in the static budget.

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

The market-share variance is the difference in budgeted contribution margin for actual market size in units caused solely by actual market share being different from budgeted market share.

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

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

The market-share variance is the difference in actual contribution margin for actual market size in units caused solely by actual market share being different from budgeted market share.

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 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.

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

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.

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

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