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A company uses standard marginal costing. Last month the standard
contribution on actual sales was $44,000 and the following variances
arose:
Total variable costs variance $6,500 Adverse
Sales price variance $2,000 Favourable
Sales volume contribution variance $4,500 Adverseans given in the text is–
Standard contribution on actual sales $44,000
Add: Favourable sales price variance $2,000
Less: Adverse total variable costs variance ($6,500)
Actual contribution $39,500WHY ISN’T SALES VOLUME CONTRIBUTION VARIANCE SUBTRACTED IN THE ABOVE SUM PLEASE
Please do not type in capital letters.
The sales volume contribution variance is the difference between the budgeted contribution and the standard contribution on the actual sales.
Had this question given the budgeted contribution then the variance would have been relevant. However the question gives the standard contribution on the actual sales so it is only the sales price variance and the cost variances that are needed to get the actual contribution.
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