When actual variable cost per unit equals standard variable cost per unit, the difference between actual and budgeted contribution margin is explained by a combination of which two variances?
A) The sales-volume variance and the fixed-overhead volume variance.
B) The sales-volume variance and the fixed-overhead budget variance.
C) The sales-price variance and the fixed-overhead volume variance.
D) The sales-price variance and sales-volume variance.
E) The sales-price variance and fixed-overhead budget variance.

Question

Quizplus · Accepted Answer

When actual variable cost per unit equals standard variable cost per unit, it means there are no variances due to variable costs. Therefore, differences in contribution margin would be due to differences in sales revenue, which can be explained by the sales-price variance (difference in actual vs. expected selling price) and the sales-volume variance (difference in actual vs. expected quantity sold).

When Actual Variable Cost Per Unit Equals Standard Variable Cost