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IM Enterprises is a manufacturer of consumer electronics products. The industry is very recent years, including an operating loss of $17,525 last year. RJM was able to turn tha sts. The summarized financial results for RJM are shown below: Gross sales: Less variable costs Direct materials Direct labor Total contribution margin Fixed costs Operating income Current Year $ 982,290 Prior Year $ 1,344,725 480,870 221,940 $ 279,480 33,509 $ 245,971 807,500 498,750 $ 38,475 56,000 $ (17,525)

IM Enterprises is a manufacturer of consumer electronics products. The industry is very recent years, including an operating loss of $17,525 last year. RJM was able to turn tha sts. The summarized financial results for RJM are shown below: Gross sales: Less variable costs Direct materials Direct labor Total contribution margin Fixed costs Operating income Current Year $ 982,290 Prior Year $ 1,344,725 480,870 221,940 $ 279,480 33,509 $ 245,971 807,500 498,750 $ 38,475 56,000 $ (17,525)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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RJM Enterprises is a manufacturer of consumer electronics products. The industry is very competitive, and RJM has seen its profits fall in recent years, including an operating loss of $17,525 last year. RJM was able to turn that around this year by aggressively cutting costs. The summarized financial results for RJM are shown below: Gross sales: Less variable costs Direct materials Direct labor Total contribution margin Fixed costs Operating income Current Year $ 982,290 480,870 221,940 $ 279,480 33,509 $ 245,971 Prior Year $ 1,344,725 807,500 498,750 $ 38,475 56,000 $ (17,525) Jim Green, the management accountant at RJM, is analyzing the company's performance for this year in order to explain to management the specific aspects that drove the company to success. Some of the information Jim obtained follows: Sales units Current Year 41,100 $ 23.90 $ 7.80 1.50 0.60 Prior Year 47,500 $ 28.31 $ 8.50 2.00 0.75 $ 14.00 Price Direct materials cost per unit of material Direct materials required per unit Direct labor required per unit Wage rate ($/hour) $ 9.00 Assume that RJM, for efficiency and to reduce cost, maintains little or no direct materials or work-in-process inventory. Required: 1. Determine the selling price variance for the current year based on sales dollars. Determine the sales volume variance based on contribution margin. 2. Determine the following variable cost variances: a. The usage and price variances for direct materials. b. The efficiency and rate variances for direct labor. 1. Selling price variance in sales dollars Sales volume variance in contribtion 2a. Materials usage variance Materials price variance 2b. Labor usage variance Labor rate variance
Transcribed Image Text:RJM Enterprises is a manufacturer of consumer electronics products. The industry is very competitive, and RJM has seen its profits fall in recent years, including an operating loss of $17,525 last year. RJM was able to turn that around this year by aggressively cutting costs. The summarized financial results for RJM are shown below: Gross sales: Less variable costs Direct materials Direct labor Total contribution margin Fixed costs Operating income Current Year $ 982,290 480,870 221,940 $ 279,480 33,509 $ 245,971 Prior Year $ 1,344,725 807,500 498,750 $ 38,475 56,000 $ (17,525) Jim Green, the management accountant at RJM, is analyzing the company's performance for this year in order to explain to management the specific aspects that drove the company to success. Some of the information Jim obtained follows: Sales units Current Year 41,100 $ 23.90 $ 7.80 1.50 0.60 Prior Year 47,500 $ 28.31 $ 8.50 2.00 0.75 $ 14.00 Price Direct materials cost per unit of material Direct materials required per unit Direct labor required per unit Wage rate ($/hour) $ 9.00 Assume that RJM, for efficiency and to reduce cost, maintains little or no direct materials or work-in-process inventory. Required: 1. Determine the selling price variance for the current year based on sales dollars. Determine the sales volume variance based on contribution margin. 2. Determine the following variable cost variances: a. The usage and price variances for direct materials. b. The efficiency and rate variances for direct labor. 1. Selling price variance in sales dollars Sales volume variance in contribtion 2a. Materials usage variance Materials price variance 2b. Labor usage variance Labor rate variance
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