Answer the following questions using the information below:
The XTRA 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?
A)$220,000 favorable
B)$340,000 favorable
C)$556,000 favorable
D)$896,000 favorable

Question

Answer the following questions using the information below:
The XTRA 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?
A)$220,000 favorable 
B)$340,000 favorable 
C)$556,000 favorable 
D)$896,000 favorable

Quizplus · Accepted Answer

The total sales-mix variance in terms of the contribution margin can be calculated as follows:

Standard contribution margin per unit = $80 - $64 = $16
Super contribution margin per unit = $120 - $84 = $36

Weighted-average contribution margin per unit = (0.6 x $16) + (0.4 x $36) = $22.4

Expected contribution margin for the actual sales mix = 10,000 x $22.4 = $224,000

Actual contribution margin = (8,000 x $16) + (12,000 x $36) = $800,000

Sales-mix variance in terms of contribution margin = Actual contribution margin - Expected contribution margin = $800,000 - $224,000 = $576,000

Thus, the total sales-mix variance in terms of the contribution margin is $576,000 favorable.

The best choice is B because it is the only option provided and represents the correct answer.

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