Capity Tea Products has an exclusive contract with British Distributors. Calamine and Capity are two brands of teas that are imported and sold to retail outlets. The following information is provided for the month of March:

Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300, respectively.
For the contribution margin, what is the total static-budget variance?
A) $6930 favorable
B) $364 unfavorable
C) $70 favorable
D) $364 favorable

Question

Capity Tea Products has an exclusive contract with British Distributors. Calamine and Capity are two brands of teas that are imported and sold to retail outlets. The following information is provided for the month of March:

Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300, respectively.
For the contribution margin, what is the total static-budget variance?
A) $6930 favorable 
B) $364 unfavorable 
C) $70 favorable 
D) $364 favorable

Quizplus · Accepted Answer

Total static-budget variance
= [(4500 × $1.00) + (3500 × $1.50)] - [(3850 × $1.80) + (3980 × $0.80)]
= $9750 - $10,114 = $364 favorable

Capity Tea Products Has an Exclusive Contract with British Distributors