For the contribution margin, what is the total flexible-budget variance

ACCOUNTING

Multiple Choice

Ceylon Tea Products has an exclusive contract with British Distributors. Calamine and Ceylon are two brands of teas that are imported and sold to retail outlets. The following information is provided for the month of March:


Actual Budget

Calamine Ceylon Calamine Ceylon

Sales in pounds 1,700 lbs. 1,800 lbs. 2,000 lbs. 1,500 lbs

Price per pound $2.50 $2.50 $2.00 $3.00

Variable cost per pound 1.00 2.00 1.00 1.50

Contribution margin $1.50 $0.50 $1.00 $1.50


Budgeted and actual fixed corporate-sustaining costs are $1,750 and $2,000, respectively.


For the contribution margin, what is the total flexible-budget variance?

a. $300 favorable

b. $950 unfavorable

c. $500 favorable

d. $800 unfavorable

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