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In: Accounting

Bella Coffee, Inc., sells two types of coffee, Irish and Cold Mountain. The monthly budget for...

Bella Coffee, Inc., sells two types of coffee, Irish and Cold Mountain. The monthly budget for U.S. coffee sales is based on a combination of last year's performance, a forecast of industry sales, and the company's expected share of the U.S. market. The following information is provided for March:

                                                 Actual                                  Budget

  Irish Cold Mountain         Irish        Cold Mountain

Sales in pounds 7,000 lbs.       8,000 lbs. 6,400 lbs.         8,600 lbs

Price per pound $25                 $30                 $25                 $30

Variable cost per pound 11                   14                   12                   13

Contribution margin $14                 $16                 $13                 $17

Budgeted and actual fixed corporate-sustaining costs are $60,000 and $72,000, respectively.

Required:

Determine the total static-budget variance, the total flexible-budget variance, and the total sales-volume variance in terms of the contribution margin.

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Expert Solution

ekkarill92 answered 1 year ago
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