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The following information is available for the Gabriel Products Company for the month of July: Static Budget Actual Units 5,000 5,100 Sales revenue $60,000 $58,650 Variable manufacturing costs $15,000 $16,320 Fixed manufacturing costs $18,000 $17,000 Variable marketing and administrative expense $10,000 $10,500 Fixed marketing and administrative expense $12,000 $11,000 The total sales-volume variance for operating income for the month of July would be Group of answer choices $700 favorable $2,550 unfavorable $100 favorable $1,350 unfavorable

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Answer: $700 Favorable

Explanation:

Total sales-volume variance = (Actual units - Static budget units) * (Contribution margin per unit of Static budget)

Contribution margin per unit of Static budget = ( Sales - Variable manufacturing costs - Variable marketing and administrative expenses) / Static units  

= (60,000 - 15,000 - 10,000) / 5,000    

= $7 per unit

Sales-volume variance = (5,100 - 5,000) * 7

= $700 Favorable

Actual sales are higher than budgeted sales so this is FAVORABLE.

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