Question

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Columbia Coco Beans Inc. sells two types of coffee, Regular and Decaf. The monthly budget for Canadian 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 Canadian market. The following information is provided for October: Budgeted Actual Regular Decaf Regular Decaf Price per kilogram $50 $60 $52 $60 Variable cost per kilogram 24 26 24 28 Contribution margin $26 $34 $28 $32 Sales (in kg) 4,000 4,500 3,700 4,800 Budgeted fixed costs are $58,000. Actual fixed costs are $62,000. Required: 1) Calculate the static-budget, flexible-budget and sales-volume variances for the contribution margin, for the company for October.

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Columbia Coco Beans Inc. sells two types of coffee, Regular and Decaf. The monthly budget for Canadian 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 Canadian market. The following information is provided for October:

Required:

1) Calculate the static-budget, flexible-budget and sales-volume variances for the contribution margin, for the company for October.

Budgeted fixed costs are $58,000. Actual fixed costs are $62,000.

			Budgeted	Budgeted	Actual	Actual
			Regular	Decaf	Regular	Decaf
Price per kilogram			$                      50	$                      60	$                            52	$                            60
Variable cost per Kilogram			24	26	24	26
Contribution Margin			$                      26	$                      34	$                            28	$                            32
Sales (in kg)			4,000	4,500	3,700	4,800

Answer 1

		Budgeted	Budgeted	Actual	Actual
	Type of Product	Regular	Decaf	Regular	Decaf
	Price per kilogram	50	60	52	60
	Variable cost per Kilogram	24	26	24	28
	Contribution Margin	26	34	28	32
	Sales (in kg)	4,000	4,500	3,700	4,800
	Static Budget:
		Regular	Decaf	Total
	Sales Volume	4,000	4,500
	Sale Revenue	200000	270000	470000
	Less: Variable Cost	96000	117000	213000
	Contribution Margin	104000	153000	257000
	Less: Fixed Cost			58000
	Net Operating Income			199000
	Flexible Budget:
		Regular	Decaf	Total
	Sales Volume	3,700	4,800
	Sale Revenue	185000	288000	473000
	Less: Variable Cost	88800	124800	213600
	Contribution Margin	96200	163200	259400
	Less: Fixed Cost			58000
	Net Operating Income			201400
	Sales Volume Variance:
	(Actual Units Sold-Budgeted Unit Sold)*Standard Contribution Margin
		Regular	Decaf
	Actual Units	3,700	4,800
	Budgeted Units	4,000	4,500
	Difference	-300	300
	Standard Contribution Margin	26	34
	Variance	-7800	10200
		Adverse	Favourable
	Total Variance	2400	Favourable