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a company uses marginal costing. the standard contribution on actual sales was 44,000. the following variances arose:
total variable costs var: 6,500 A
sales price var: 2,000 F
sales volume var: 4,500 Awhat is the actual contribution?
the answer is 39,500.
i did the following:
standard profit = 44,000
sales price var = 2000
sales vol var = (4500)
———————————-
41,500
less cost var 6,500
——————————–
35,000in the explained answer, the sales volume variance is not taken in the calculation.
why?
It is because they starting figure is ‘standard contribution on actual sales’.
(If the starting figure had been ‘contribution on budgeted sales’ then the sales volume variance would have been relevant)
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