Cornerstone Exercise 18.6 (Algorithmic) Contribution Margin Variance

Iliff, Inc., produces and sells two types of countertop ovensthe toaster oven and the convection oven. Budgeted and actual data for the two models are shown below.

Budgeted Amounts:

	Toaster Oven	Convection Oven	Total
Sales:
($100 * 25,500)	$2,550,000
($147 * 20,000)		$2,940,000	$5,490,000
Variable expenses	540,000	810,000	1,350,000
Contribution margin	$2,010,000	$2,130,000	$4,140,000

Actual Amounts:

	Toaster Oven	Convection Oven	Total
Sales:
($84 * 22,500)	$1,890,000
($155 * 13,000)		$2,015,000	$3,905,000
Variable expenses	566,000	721,200	1,287,200
Contribution margin	$1,324,000	$1,293,800	$2,617,800

Required:

1. Calculate the contribution margin variance.

$ - Select your answer -FavorableUnfavorableItem 2

2. What if actual units sold of the convection oven decreased? How would that affect the contribution margin variance? - Select your answer -It would become less unfavorable or more favorableIt would become more unfavorable or less favorableItem 3

What if actual units sold of the convection oven increased? How would that affect the contribution margin variance?