This is the sales price variance. See the correct answer for a complete explanation.
This answer results from using the actual unit contribution margin instead of the budgeted unit contribution margin. See the correct answer for a complete explanation.
This answer is the total sales variance, which includes variances caused by differences in both the sales price and in the quantity sold. The total sales variance on the contribution margin is the difference between actual and budgeted amount of contribution margin. The sales volume/quantity variance is calculated as follows: (Actual Sales Volume ? Budgeted Sales Volume) × Budgeted Contribution per Unit. See the correct answer for a complete explanation.
This question is asking for the sales volume/quantity variance on the contribution margin that is calculated as follows: (Actual Sales Volume ? Budgeted Sales Volume) × Standard Contribution per Unit. The total budgeted contribution margin was $120,000, which gives us a $20 contribution margin per unit ($120,000 ÷ 6,000). Now we can calculate the sales volume variance: (5,000 ? 6,000) × $20 = ($20,000) unfavorable. The actual sales volume was lower than budgeted, and that caused the negative impact of $20,000 on the contribution margin.
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The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income. The effect of the sales quantity variance on the contribution margin for November is