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mansoor.
mansoor.-
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mansoor
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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?
John Moffat
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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)
mansoor
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hmmm…food for thought.. thank u ..:)
mansoor
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