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Hello Sir,
The following variances occurred last period.
Sales volume contribution: $20,000 favourable
Sales price: $5,000 adverse
Total variable cost: $18,000 favourable
Fixed cost expenditure: $12,000 adverse
If the flexed budget contribution was $200,000, what was the actual contribution?$213,000
$218,000
$221,000
$233,000In this question, I used the sales volume contribution in my calculation, like 200 + 20 – 5 + 18 = 233, but in the question they are ignore it . Is this related to the FLEXED budget? Because, if I’m not mistaken, when calculating the actual contribution from the budgeted contribution, I should also consider the sales volume contribution. Can you clarify this for me?
The sales volume variance is not relevant because we are starting from the flexed contribution. The sales volume variance is the different between the original budget contribution and the flexed contribution.
Have you watched our free lectures on this?
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