When Actual Variable Cost Per Unit Equals Standard Variable Cost

question 50

Multiple Choice

When actual variable cost per unit equals standard variable cost per unit, the difference between actual and budgeted contribution margin is explained by a combination of which two variances?

• A) The sales-volume variance and the fixed-overhead volume variance.
• B) The sales-volume variance and the fixed-overhead budget variance.
• C) The sales-price variance and the fixed-overhead volume variance.
• D) The sales-price variance and sales-volume variance.
• E) The sales-price variance and fixed-overhead budget variance.

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Definitions:

Economic Income

The sum of a company's net cash flow and the change in present value of a company's cash flows in a given period.

ROA

Return on Assets, a financial ratio indicating the profitability of a company relative to its total assets.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, which is used to finance its overall operations and growth.

ROE

Return on Equity, measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.