3. The Steam Company manufactures a product that is expected to incur $24 per unit in variable production costs and sell for $75 per unit. The sales commission is 10% of the sales price. Due to intense competition, Steam actually sold 200 units for $50 per unit. The actual variable production costs incurred were $30.00 per unit. Calculate the total contribution margin and contribution margin ratio at the expected price/costs and the actual price/costs. How might management use this information? Complete the expected contribution margin by entering the appropriate amounts to calculate the total contribution margin and contribution margin ratio. (Enter the contribution margin ratio to two decimal place, XXX%.) Expected Contribution Margin Net Sales Revenue Variable Costs: Production Costs Sales Commission Contribution Margin Contribution Margin Ratio Complete the actual contribution margin by entering the appropriate amounts to calculate the total contribution margin and contribution margin ratio. (Enter the contribution margin ratio to two decimal place, XXX%.) Actual Contribution Margin Net Sales Revenue Variable Costs: Production Costs Sales Commission Contribution Margin Contribution Margin Ratio How might management use this information? The actual results varied significantly from the expected results, The company may decide to ▼ Management should investigate the cause(s) for the difference in the the contribution margin. Also, because the prediction was significantly different from the actual results, management may also want to evaluate the methods the company uses to
3. The Steam Company manufactures a product that is expected to incur $24 per unit in variable production costs and sell for $75 per unit. The sales commission is 10% of the sales price. Due to intense competition, Steam actually sold 200 units for $50 per unit. The actual variable production costs incurred were $30.00 per unit. Calculate the total contribution margin and contribution margin ratio at the expected price/costs and the actual price/costs. How might management use this information? Complete the expected contribution margin by entering the appropriate amounts to calculate the total contribution margin and contribution margin ratio. (Enter the contribution margin ratio to two decimal place, XXX%.) Expected Contribution Margin Net Sales Revenue Variable Costs: Production Costs Sales Commission Contribution Margin Contribution Margin Ratio Complete the actual contribution margin by entering the appropriate amounts to calculate the total contribution margin and contribution margin ratio. (Enter the contribution margin ratio to two decimal place, XXX%.) Actual Contribution Margin Net Sales Revenue Variable Costs: Production Costs Sales Commission Contribution Margin Contribution Margin Ratio How might management use this information? The actual results varied significantly from the expected results, The company may decide to ▼ Management should investigate the cause(s) for the difference in the the contribution margin. Also, because the prediction was significantly different from the actual results, management may also want to evaluate the methods the company uses to
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:3. The Steam Company manufactures a product that is expected to incur $24 per unit in variable production costs and sell for $75 per unit. The sales commission is 10% of the sales price. Due to intense competition, Steam actually sold 200 units for $50 per unit. The actual
variable production costs incurred were $30.00 per unit. Calculate the total contribution margin and contribution margin ratio at the expected price/costs and the actual price/costs. How might management use this information?
Complete the expected contribution margin by entering the appropriate amounts to calculate the total contribution margin and contribution margin ratio. (Enter the contribution margin ratio to two decimal place, X.XX%.)
Expected Contribution Margin
Net Sales Revenue
Variable Costs:
Production Costs
Sales Commission
Contribution Margin
Contribution Margin Ratio
Complete the actual contribution margin by entering the appropriate amounts to calculate the total contribution margin and contribution margin ratio. (Enter the contribution margin ratio to two decimal place, X.XX%.)
Actual Contribution Margin
Net Sales Revenue
Variable Costs:
Production Costs
Sales Commission
Contribution Margin
Contribution Margin Ratio
How might management use this information?
%
The actual results varied significantly from the expected results,
The company may decide to
%
▼ Management should investigate the cause(s) for the difference in the
the contribution margin. Also, because the prediction was significantly different from the actual results, management may also want to evaluate the methods the company uses to
Transcribed Image Text:The actual results varied significantly from the expected results,
The company may decide to
Management should in
significantly
both in total contribution margin and contribution margin ratio.
only in contribution margin ratio.
only in total contribution margin.
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