Question 1

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 2017 were as follows:

What is the contribution margin for the flexible budget? (Round intermediary calculations to the nearest dollar.)
A) $1,360,800
B) $4,368,000
C) $4,698,400
D) $5,728,800

Accepted Answer

11ea1398_f0cb_3f7f_a1e4_e56077f2f602_TB3027_00

Question 2

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

Accepted Answer

Dividing the sales-volume variance into sales-mix variance and sales-quantity variance allows for a more detailed analysis of the factors that contributed to changes in sales volume. The sales-mix variance pertains to changes in the relative proportions of different products or services sold, while the sales-quantity variance refers to changes in the actual number of units sold. By isolating these two factors, companies can better understand the impact of changes in product mix and changes in sales volume on overall revenue.

Question 3

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 2017 were as follows:

What is the total sales-volume variance in terms of the contribution margin?
A) $1,924,000 favorable
B) $1,404,000 favorable
C) $5,200,000 unfavorable
D) $1,924,000 unfavorable

Accepted Answer

Budgeted contribution margin per unit:
 11ea1398_f0cb_6694_a1e4_f91c3372de6b_TB3027_00

Question 4

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 2017 were as follows:

What is the total flexible-budget variance in terms of the contribution margin? (Round intermediary calculations to the nearest dollar.)
A) $340,800 favorable
B) $1,356,800 favorable
C) $340,800 unfavorable
D) $4,514,000 unfavorable

Accepted Answer

Budgeted contribution margin per unit:
 11ea1398_f0cb_6692_a1e4_fd4098c4643c_TB3027_00

Question 5

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 2017 were as follows:

What is the total sales-quantity variance in terms of the contribution margin? (Round any intermediary calculations two decimal places.)
A) $1,606,800 unfavorable
B) $535,600 favorable
C) $1,071,200 unfavorable
D) $1,606,800 favorable

Accepted Answer

11ea1398_f0cb_6696_a1e4_4b60ee063d87_TB3027_00 
 11ea1398_f0cb_6697_a1e4_bb29ec6d853d_TB3027_00

Question 6

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 correctly defines the flexible-budget variance.

Question 7

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 8

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

The statement is correct. By analyzing the static-budget variance into the flexible-budget variance and the sales-volume variance, managers can have a better understanding of the factors that contributed to the variance and take appropriate action to improve performance. The flexible-budget variance is caused by the difference between the actual level of output and the budgeted level of output, while the sales-volume variance is caused by the difference between the actual level of sales and the budgeted level of sales.

Question 9

The Corata Appliance Manufacturing Corporation manufactures two vacuum cleaners, the Standard and the Super. The following information was gathered about the two products:

What is the total sales-quantity variance in terms of the contribution margin? (Round intermediary calculations to two decimal places.)
A) $316,000 favorable
B) $179,760 favorable
C) $495,760 favorable
D) $136,240 favorable

Accepted Answer

11ea1398_f0cb_186b_a1e4_ddf8b9bf5535_TB3027_00

Question 10

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 means the actual sales mix is higher than the budgeted sales mix, resulting in higher profitability due to the higher sales of more profitable products. Therefore, the statement is true.

Question 11

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 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

This statement is true. The sales-mix variance calculates the impact of a change in the proportion of products or services sold on the contribution margin. It is calculated by comparing the actual sales mix to the budgeted sales mix and determining the difference in contribution margin between the two.

Question 13

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 budgeted contribution margin and the actual contribution margin resulting from a change in the sales mix. It can be calculated by using the budgeted contribution margin per composite unit and the actual number of units sold for each product in the sales mix. Therefore, the statement is true.

Question 14

The sales-quantity variance occurs in a multi-product company from a change in the sales mix.

Accepted Answer

It occurs from a change in volume of sales, independent of any change in the sales-mix.

Question 15

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 2017 were as follows:

What is the total static-budget variance in terms of the contribution margin?
A) $680,000 favorable
B) $1,320,000 favorable
C) $1,320,000 unfavorable
D) $680,000 unfavorable

Accepted Answer

Total static-budget variance in terms of the contribution margin
= $4,720,000 - $6,040,000 = $1,320,000 favorable

Question 16

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 2017 were as follows:

What is the total sales-mix variance in terms of the contribution margin? (Round any intermediary calculations two decimal places.)
A) $925,600 unfavorable
B) $613,600 unfavorable
C) $312,000 favorable
D) $1,237,600 favorable

Accepted Answer

Sales mix calculations:
Budgeted Victor = 6,000 / 30,000 = 0.20
Budgeted House-mate = 24,000 / 30,000 = 0.80
Actual Victor = 5500 / 44,500 = 0.12
Actual House-mate = 39,000 / 44,500 = 0.88
Sales mix variance:
 11ea1398_f0cb_8da9_a1e4_cdf729cfea71_TB3027_00

Question 17

The Corata Appliance Manufacturing Corporation manufactures two vacuum cleaners, the Standard and the Super. The following information was gathered about the two products:

What is the total sales-mix variance in terms of the contribution margin? (Round intermediary calculations to two decimal places.)
A) $369,600 favorable
B) $295,680 favorable
C) $1,034,880 favorable
D) $665,280 favorable

Accepted Answer

Sales mix calculations:
Budgeted Standard = 2700 / (2700 + 600) = 0.82
Budgeted Super = 600 / (2700 + 600) = 0.18
Actual Standard = 3000 / (3000 + 1400) = 0.68
Actual Super = 1400 / (3000 + 1400) = 0.32
 11ea1398_f0cb_186d_a1e4_cdface75cf86_TB3027_00

Question 18

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

Accepted Answer

The static-budget variance is specifically the difference between an actual result and the amount budgeted in the static budget. It does not take into account any changes or adjustments made after the original budget was created.

Question 19

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

Accepted Answer

A composite unit is a weighted combination of individual units, so the statement is true.

Question 20

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

The market-share variance formula calculates the difference between the budgeted contribution margin and the actual contribution margin caused by a variance in market share. It assumes that the overall market size remains constant. Therefore, option A is correct.

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

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

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 2017 were as follows: What is the total sales-volume variance in terms of the contribution margin?

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 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.

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 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.

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

The sales-quantity variance occurs in a multi-product company from a change in the sales mix.

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 2017 were as follows: What is the total static-budget variance in terms of the contribution margin?

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

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.