Company Blue Red Green Yellow Net Sales Revenue $ 1,900,000 2$ (d) $ 1,500,000 Variable Costs (a) 47,250 1,050,000 256,200 Fixed Costs (b) 168,000 159,000 (k) Operating Income (Loss) (e) (g) 97,800 298,500 Units Sold 190,000 9,000 (h) (1) Contribution Margin per Unit 3.00 (f) 75.00 %2$ 18.00 Contribution Margin Ratio (c) 80% 30%
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Calculating cost-volume-profit elements
The budgets of four companies yield the following information:
Requirements
- Fill in me blanks for each missing value. (Round the contribution margin per unit to the nearest cent.)
- Which company has the lowest breakeven point in sales dollars?
- What causes the low breakeven point?
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