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Contribution Margin Volume Variance Iliff, Inc., produces and sells two types of countertop ovens—the toaster oven...

  1. Contribution Margin Volume Variance

    Iliff, Inc., produces and sells two types of countertop ovens—the 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 × 29,500) $2,950,000  
        ($149 × 14,500) $2,160,500   $5,110,500  
    Variable expenses 460,000   800,000   1,260,000  
        Contribution margin $2,490,000   $1,360,500   $3,850,500  

    Actual Amounts:

    Toaster
    Oven
    Convection
    Oven
    Total
    Sales:
        ($82 × 25,000)   $2,050,000  
        ($157 × 13,500) $2,119,500   $4,169,500  
    Variable expenses 570,400   658,900   1,229,300  
        Contribution margin $1,479,600   $1,460,600   $2,940,200  

    Required:

    1. Calculate the budgeted average unit contribution margin. Round your answer to the nearest cent. Use rounded answer in subsequent computations.
    $ per unit

    2. Calculate the contribution margin volume variance.

    $  

    3. What if actual units sold of the convection oven decreased? How would that affect the contribution margin volume variance?

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

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