Answer the Following Questions Using the Information Below:
Ceylon Tea

question 216

Multiple Choice

Answer the following questions using the information below:
Ceylon Tea Products has an exclusive contract with West Sydney Tea Importers Corporation.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:
$$\begin{array}{c}&&&&&&&&&&&&&{ \text { Actual } } &&&&&&& { \text { Budget } } \\\end{array}\\\begin{array} { l r r r r r } & \text { Calamine } & \text { Ceylon } & & \text { Calamine } & \text { Ceylon } \\\text { Sales in kg } & 1850 \mathrm {~kg} & 1650 \mathrm {~kg} & & 2000 \mathrm {~kg} & 1500 \mathrm {~kg} \\\text { Price per kg } & \$ 2.50 & \$ 2.50 & & \$ 2.00 & \$ 3.00 \\\text { Variable cost per kg } & \underline { 1.00 } & \underline { 2.00 } && \underline { 1.00 } & \underline { 1.50 } \\\text { Contribution margin } & \underline {\$ 1.50} & \underline { \$ 0.50} & & \underline { \$ 1.00} & \underline { \$ 1.50}\end{array}$$ Budgeted and actual fixed corporate-sustaining costs are $1750 and $2000,respectively.
-For the contribution margin,what is the total static-budget variance?

• A)$725 unfavourable.
• B)$300 favourable
• C)$500 favourable
• D)$650 unfavourable

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Definitions:

Unearned Consulting Fees

Money received for consulting services that have not yet been provided, representing a liability until the service is performed.

Normal Balance

The side (debit or credit) of an account that is typically increased, reflecting a fundamental principle in accounting.

Liability

A company's legal financial debts or obligations that arise during the course of business operations.

Prepaid Insurance

Payments made in advance for insurance coverages, recognized as assets until the coverage period lapses and it then becomes an expense.