The Omega 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:
Static Budget ZENITH House-Helper Total
Number sold 15,000 60,000 75,000
Contribution margin $3,750,000 $12,000,000 $15,750,000
Actual Results ZENITH House-Helper Total
Number sold 16,500 38,500 55,000
Contribution margin $6,200,000 $10,200,000 $16,400,000
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.