Question 1
When there is a lesser degree of homogeneity, fewer cost pools are required to accurately explain the use of company resources.
◦ true
◦ false
Question 2
Blue States Coffee, Inc., sells two types of coffee, Colombian and Blue Mountain. The monthly budget for U.S. coffee sales is based on a combination of last year's performance, a forecast of industry sales, and the company's expected share of the U.S. market. The following information is provided for March:
| Colombian | Blue Mountain | Colombian | Blue Mountain |
| Sales in pounds | 15,000 lbs. | 17,000 lbs. | 13,500 lbs. | 18,000 lbs |
| Price per pound | $13.00 | $16.00 | $13.00 | $16.00 |
| Variable cost per pound | 5.00 | 9.00 | 6.50 | 9.00 |
| Contribution margin | $8.00 | $7.00 | $6.50 | $7.00 |
Budgeted and actual fixed corporate-sustaining costs are $60,000 and $72,000, respectively.
Required:
a. Calculate the actual contribution margin for the month.
b. Calculate the contribution margin for the static budget.
c. Calculate the contribution margin for the flexible budget.
d. 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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