Folsom Fashions sells a line of women's dresses. Folsom's performance report for November is shown below. (CMA adapted)
The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income.
|
Actual
|
Budget
|
|
Dresses sold
|
5,000
|
6,000
|
|
Sales
|
$235,000
|
$300,000
|
|
Variable costs
|
($145,000)
|
($180,000)
|
|
Contribution margin
|
$90,000
|
$120,000
|
|
Fixed costs
|
($84,000)
|
($80,000)
|
|
Operating income
|
$6,000
|
$40,000
|
1. The effect of the sales quantity variance on the contribution margin for November is: $30000 U , $18000 U, $20000 U , $15000 U
2. The sales price variance for November is: $30000 U , $18000 U , $20000 U , $15000 U