In September, Larson Inc. sold 50,000 units of its only product for $273,000, and incurred a total cost of $255,000, of which $28,000 were fixed costs. The flexible budget for September showed total sales of $330,000. Among variances of the period were: total variable cost flexible-budget variance, $7,000U; total flexible-budget variance, $69,000U; and, sales volume variance, in terms of contribution margin, $55,000U.

The total number of budgeted units reflected in the master budget for September, to the nearest whole number, was:

75,000 units


1. Budgeted contribution margin per unit = Flexible budget (FB) contribution margin/actual sales volume

2. FB contribution margin = FB sales revenue ? FB variable costs.

3. Actual variable costs = ($255,000 (given) ? $28,000 (given)) = $227,000.

4. Therefore, FB variable costs = $227,000 ? $7,000U variance = $220,000.

5. FB contribution margin = $330,000 (given) ? $220,000 = $110,000.

6. Budgeted contribution margin/unit = $110,000/50,000 units (given) = $2.20/unit.

7. Sales volume variance = Budgeted contribution margin/unit × (master budget ? actual) units sold.

8. $55,000U (given) = $2.20/unit × (X ? 50,000) units.

9. $55,000/$2.20/unit = X ? 50,000 units

10. Therefore, X = 25,000 units + 50,000 units = 75,000 units (to the nearest whole number)