The Guangzhou Corporation (GC) sells two brands of wine glasses, Plain and Chic. GC provides the following

Question:

The Guangzhou Corporation (GC) sells two brands of wine glasses, Plain and Chic. GC provides the following information for sales in the month of June 2015:

Static-budget total contribution margin ........................... $5,600

Budgeted units to be sold of all glasses ...................... 2,000 units

Budgeted contribution margin per unit of Plain ............. $2 per unit

Budgeted contribution margin per unit of Chic .............. $6 per unit

Total sales-quantity variance ..................................... $1,400 U

Actual sales-mix percentage of Plain ................................. 60%

All variances are to be computed in contribution-margin terms.

Required

1. Calculate the sales-quantity variances for each product for June 2015.

2. Calculate the individual-product and total sales-mix variances for June 2015. Calculate the individual-product and total sales-volume variances for June 2015.

3. Briefly describe the conclusions you can draw from the variances.

Contribution Margin
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