If a company has a budgeted contribution margin of $200,000 and an actual contribution margin of $180,000, what is the contribution margin variance?

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$20,000 Favorable
$20,000 Unfavorable
$40,000 Favorable
$40,000 Unfavorable

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Q: If a company has a budgeted contribution margin of $200,000 and an actual contribution margin of $180,000, what is the contribution margin variance?

Solution: Contribution Margin Variance = Actual Contribution Margin - Budgeted Contribution Margin = $180,000 - $200,000 = -$20,000 (Unfavorable)

Steps: 6

Step 1: Identify the budgeted contribution margin, which is $200,000.
Step 2: Identify the actual contribution margin, which is $180,000.
Step 3: Use the formula for contribution margin variance: Actual Contribution Margin - Budgeted Contribution Margin.
Step 4: Substitute the values into the formula: $180,000 - $200,000.
Step 5: Calculate the result: $180,000 - $200,000 = -$20,000.
Step 6: Determine if the variance is favorable or unfavorable. Since the result is negative, it is unfavorable.

If a company has a budgeted contribution margin of $200,000 and an actual contribution margin of $180,000, what is the contribution margin variance?

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