Question

Hollaway Corp. has the following data for the current fiscal year: Actual Budget Sales Units Product X 20,000 90,000 Product Y 140,000 110,000 Total 160,000 200,000 Contribution Margin Product X $ 9.00 $ 8.00 Product Y $ 6.00 $ 5.00 The contribution margin sales volume variance is: Multiple Choice $200,000 favorable. $260,000 unfavorable. $340,000 unfavorable. $410,000 unfavorable. $580,000 unfavorable.

Answer 1

Answer:

$156,000 unfavorable.

Explanation:

For Product X:

Total units: budget = 90,000 + 110,000 = 200,000; actual units = 20,000 + 140,000 = 160,000

Sales mix: budget: 90/200 = 45%; actual: 20/160 = 12.5%

(.125 - .45) x 160,000 x $8 = $416,000 unfavorable

For Product Y:

Sales mix: budget: 110/200 = 55%; actual: 140/160 = 87.5%

(.875 - .55) x 160,000 x $5 = $260,000 favorable

Total mix variance: $260,000 - $416,000 = $156,000 unfavorable