Question

Pascagoula Co. has two products: Jelko and Melko. The company had the following budget and
operating results for the period just ended. The budgeted total industry sales for both products
was 324,800 units and the actual industry sales was 350,000.

Master Budget
	Jelko	Melko	Total
Sales	$324,800	$426,300	$751,100
Variable costs	194,880	213,150	408,030
Contribution margin	$129,920	$213,150	$343,070
Fixed costs	162,000	130,000	292,000
Operating income	$<32,080>	$83,150	$51,070
Selling price per unit	$160	$70

Operating Results
	Jelko	Melko	Total
Sales	$365,400	$457,500	$822,900
Variable Costs	243,600	201,300	444,900
Contribution margin	$121,800	$256,200	$378,000
Fixed Costs	163,000	130,000	293,000
Operating income	$<41,200>	$126,200	$85,000
Units sold	2,100	4,900

Required:
1. Calculate the contribution margin sales volume variance for Jelko.
2. Calculate the contribution margin sales volume variance for Melko.
3. Calculate the sales mix variance for Jelko.
4. Calculate the sales quantity variance for Melko.
5. Calculate the sales mix variance for Jelko.
6. Calculate the sales quantity variance for Melko.
7. Calculate the market share variance for both products.
8. Calculate the market size variance for both products.

Answer 1

As per our policy, we cannot able to post solution more than four sub parts of question.

Master Budget
	Jelko	Melko	Total
Sales	$324,800	$426,300	$751,100
Variable costs	194,880	213,150	408,030
Contribution margin	$129,920	$213,150	$343,070
Fixed costs	162,000	130,000	292,000
Operating income	($32,080)	$83,150	$51,070
Selling price per unit	$160	$70
Budgeted unit sold (Sales / Selling price per unit)	2030	6090	8120
Budgeted contribution margin per unit (Contribution margin / budgeted unit sold)	$64	$35
Operating Results
	Jelko	Melko	Total
Sales	$365,400	$457,500	$822,900
Variable Costs	243,600	201,300	444,900
Contribution margin	$121,800	$256,200	$378,000
Fixed Costs	163,000	130,000	293,000
Operating income	($41,200)	$126,200	$85,000
Actual Units sold	2,100	4,900	7,000

Answer 1 & 2

	Jelko	Melko
Actual units sold * budgeted average unit contribution margin (Jelco = 2100*64) (Melco = 4900*35)	134400	171500
Less: Budgeted contribution margin	$129,920	$213,150
Contribution margin sales volume variance	$4,480	($41,650)
Indicate	Favorable	Unfavorable

Answer 3

Total sold actual quantity		7000
Unit Sales at Standard Mix
Jelco	7000*2030/8120	1750
Melco	7000*6090/8120	5250
Sales Mix Variance under marginal costing = (Actual Unit Sold - Unit Sales at Standard Mix) x budgeted contribution margin per unit
Jelco
Actual Unit Sold		2,100
Unit Sales at Standard Mix		1750
Difference		350
Budgeted contribution margin per unit		$64
Sales Mix Variance		22400
Indicate		Favorable

Answer 4

Sales Quantity Variance under marginal costing = (Unit - sales at standard mix less Budgeted sales quantities) * budgeted contribution margin per unit
Melko
Unit sales at standard mix		5250
Budgeted sales quantities		6090
Difference		-840
Budgeted contribution margin per unit		$35
Sales Quantity Variance under marginal costing		($29,400)
Indicate		Unfavorable