Page 289 - PM Integrated Workbook 2018-19

Advanced variances

In order to perform the calculations we need to calculate the contribution per
unit of each product:

Tables Chairs Sideboards
$ per unit $ per unit $ per unit

Average selling price 2,200 320 2,800
Direct material cost per unit 1,000 160 1,200

Direct labour cost per unit 400 60 600
Variable overhead cost per unit 40 6 60

Contribution 760 94 940

Sales mix contribution variance:

Actual Actual Diff. Variance from Mix variance
sales sales at weighted ($000)
quantity budget average cont.
mix per unit
Tables 7,200 9,200 2,000 A $760 – $354.10 811.80 A

Chairs 31,000 29,900 1,100 F $94 – $354.10 286.11 A
Sideboards 7,800 6,900 900 F $940 – $354.10 527.31 F

–––––– –––––– ––––––––

46,000 46,000 570.60 A
–––––– –––––– ––––––––

Or alternatively

Actual Actual Diff. Contribution Mix variance
sales sales at ($000)
quantity budget
mix

Tables 7,200 9,200 2,000 A $760 1,520 A
Chairs 31,000 29,900 1,100 F $94 103.40F

Sideboards 7,800 6,900 900 F $940 846.00 F
–––––– –––––– ––––––––

46,000 46,000 570.60 A
–––––– –––––– ––––––––

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