Darwin Company Calculation Jan 25th

(I) Calculate contribution margin= selling price- variable expense * # of units

Basic:
SP = 240
Variable expense=65
# of units= 600
Contribution Margin for basic= 240-65= 175 * 600= 105,000
Complete:
SP= 480
V.E= 200
# of units =400
Contribution Margin for complete= 480-200=280 * 400=112,000
Actual Total Contribution= (105,000+ 112,000) =217,000

Budgeted Contribution Margin

Basic:
SP=220
V.E=70
# of units=625
Contribution Margin for basic= 220-70=150*625=93,750
Complete
SP= 500
V.E= 200
# of units=375
Contribution Margin for complete=500-200=300*375=112,500
Budgeted Contribution Margin=93750+112,500=206,250
Difference between the two=217,000-206,250=10,750
(II) Calculate the contribution margin volume variance= (Total actual sale quantity-total
budgeted sale quantity) x budgeted unit contribution margin (total budgeting con/
budgeting sales quantity
(600+400) -(625+375) x 206250/1000
(1000-1000) x 206.25=0
N.B When it is 0 its neither adverse nor favorable.

(III) Calculate the sales mix variance. Rec (33.28)

Basic sales mix= (actual sales quantity- budgeting sales quantity) x (budgeting
contribution per unit -budgeting average unit contribution margin)
(600-625) x (150-206.25) =1406.25 (basic is less profitable product hence
favourable).150 less than complete sale.

Complete sales mix= (actual sales quantity- budgeting sales quantity) x

(budgeting contribution per unit -budgeting average unit contribution margin)
(400- 375) x (300-206.25) =2343.75