The Octova Corporation Manufactures Two Types of Vacuum Cleaners: the ZENITH

question 33

Essay

The Octova Corporation manufactures two types of vacuum cleaners: the ZENITH for commercial building use and the House-Helper for residences.Budgeted and actual operating data for the year 20X5 are as follows:
$$\begin{array}{l}\begin{array} { l r r r } \text { Static Budget } & \text { ZENITH } & \text { House-Helper } & \text { Total } \\\hline \text { Number sold } & 20,000 & 80,000 & 100,000\end{array}\\\text { Contribution margin } \quad \$ 4,600,000 \quad \$ 15,200,000 \quad \$ 19,800,000\\\\\begin{array} { l r r r } \text { Actual Results } & \text { ZENITH } & \text { House-Helper } & \text { Total } \\\hline\text { Number sold } & 21,500 & 60,000 & 81,500 \\\text { Contribution margin } & \$ 6,665,000 & \$ 13,200,000 & \$ 19,865,000\end{array}\end{array}$$ Required:
a.Calculate the contribution margin for the flexible budget.
b.Determine the total static-budget variance,the total flexible-budget variance,and the total sales-volume variance in terms of the contribution margin.

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Definitions:

Influence

The capacity to have an effect on the character, development, or behavior of someone or something, or the effect itself.

Operations

The day-to-day activities required for a business to function, including production, marketing, and management.

Accrued Interest

The amount of interest that has accumulated on a debt since the last payment date but has not yet been paid.

Bond Interest Rate

The fixed or variable rate of interest paid by bond issuers on the principal amount, to bondholders until maturity.