Folsom Fashions sells a line of women's dresses.Folsom's performance report for November is shown below: (CMA adapted) The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income. The effect of the sales quantity variance on the contribution margin for November is:

Question

Folsom Fashions sells a line of women's dresses.Folsom's performance report for November is shown below: (CMA adapted) The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income.  The effect of the sales quantity variance on the contribution margin for November is:

Quizplus · Accepted Answer

The formula for calculating the sales quantity variance is (Actual quantity - Budgeted quantity) x Budgeted selling price. In this case, the actual quantity of dresses sold was 900, while the budgeted quantity was 1,000. This means there was a shortfall of 100 dresses. Therefore, the sales quantity variance is (900 - 1,000) x $200 = $20,000 unfavorable. This negative variance means that the company sold fewer dresses than it had planned, resulting in a lower contribution margin than expected.

Folsom Fashions Sells a Line of Women's Dresses