Answer the Following Questions Using the Information Below:
Capity Tea

question 58

Multiple Choice

Answer the following questions using the information below:
Capity Tea Products has an exclusive contract with British Distributors. Calamine and Capity are two brands of teas that are imported and sold to retail outlets. The following information is provided for the month of March:
$\begin{array}{lrrrr} &\text { Actual }&&\text { Budget }\\& \text { Calamine } & \text { Capity } & \text { Calamine } & \text { Capity } \\\text { Sales in pounds } & 3,740 \mathrm{lbs} . & 3,960 \mathrm{lbs} . & 4,400 \mathrm{lbs} . & 3,300 \mathrm{lbs} \\\text { Price per pound } & \$ 2.80 & \$ 2.80 & \$ 2.00 & \$ 3.00 \\\text { Variable cost per pound } & 1.00 & 2.00 & 1.00 & 1.50 \\\text { Contribution margin } & \$ 1.80 & \$ 0.80 & \$ 1.00 & \$ 1.50\end{array}$ Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300, respectively.
-For the contribution margin,what is the total flexible-budget variance?

• A) $330 favorable
• B) $220 favorable
• C) $550 favorable
• D) $1,000 unfavorable

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations by comparing its current assets to its current liabilities.

Disclosure Requirements

Regulations or standards mandating companies to reveal certain financial and non-financial information to maintain transparency and inform stakeholders.

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International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board for financial reporting globally.

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