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

Question

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

Quizplus · 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.

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