Question

When actual variable cost per unit equals standard variable cost per unit, the difference between actual and budgeted contribution margin is explained by a combination of which two variances?

A. The sales-volume variance and the fixed-overhead volume variance.
B. The sales-volume variance and the fixed-overhead budget variance.
C. The sales-price variance and the fixed-overhead volume variance.
D. The sales-price variance and sales-volume variance.
E. The sales-price variance and fixed-overhead budget variance.

Answer 1

The difference between actual and budgeted contribution margins, when variable costs per unit are aligned, is due to the sales-price variance and sales-volume variance.

Step-by-step explanation:

When the actual variable cost per unit equals the standard variable cost per unit, the variables that explain the difference between actual and budgeted contribution margin are the sales-price variance and sales-volume variance. Option D is correct. The sales-price variance arises when the actual selling price per unit deviates from the planned selling price per unit, affecting the total contribution margin. The sales-volume variance occurs when the actual quantity of units sold differs from the budgeted quantity, also impacting the contribution margin.