Flexible-budget variance, sales-quantity, market-size, and market-share variance.

The
actual contribution margin per unit will impact the following sales variance:
a. Flexible-budget variance
b. Market-size variance
c. Market-share variance.
d. Sales-quantity variance
Choice "a" is correct. The flexible-budget variance takes into account the difference between the actual
contribution margin per unit and the budgeted contribution margin per unit. That differential is then
multiplied by actual units sold of each of the products.
Choices "b", "c", and "d" are incorrect. Each of these variances uses the budgeted contribution margin
per unit and not the actual contribution margin per unit.

14-17 Sales-volume, sales-mix, and sales-quantity variance. Lexota, Inc., an auto

manufacturer, reported the following budgeted and actual sales of its vehicles during September,
Year 2:

The budgeted contribution margin is 20% for both vehicle types. Which of the following statements is
true concerning the sales variances for Lexota, Inc. for September, Year 2?
a. The sales-volume variance for the company is favorable.
b. The sales-quantity variance for the company is unfavorable.
c. The budgeted variable cost for each vehicle type is the same.
d. The sales-mix variance for the company is unfavorable.

(Solution): Choice "d" is correct. The sales mix variance evaluates the impact of the company’s
departure from the planned mix of product sales. Since the contribution margin percentage of both
products is the same and the company sold more of the low price Ota Gas Sippers and less of the high
price Power Lex 500s than anticipated, the sales mix variance is unfavorable because the company sold
more of the low (absolute) contribution margin product and less of the higher (absolute) contribution
margin product.
Choice "a" is incorrect. The sales volume variance is unfavorable because the company sells the same
total quantity of products but more of the lower contribution margin Ota Gas Slipper and less of the
higher contribution margin Power Lex 500.
Choice "b" is incorrect. The sales quantity variance is $0 because the company budgeted sales of 400
units and sold 400 units.
Choice "c" is incorrect. The budgeted variable cost for each vehicle is 80% of the budgeted sales price.
The budgeted variable cost in dollars for each vehicle is different because the price of each vehicle type
is different.