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RJM Enterprises is a manufacturer of consumer electronics products. The industry is very competitive, and RJM has seen its pr in recent years, including an operating loss of $17,399 last year. RJM was able to turn that around this year by aggressively cutti costs. The summarized financial results for RJM are shown below: Gross sales: Less variable costs Direct materials Direct labor Total contribution margin Current Year $935,340 589,328 330,120 $ 95,892 Prior Year $ 1,277,256 756,960 485,640 $ 34,656

RJM Enterprises is a manufacturer of consumer electronics products. The industry is very competitive, and RJM has seen its pr in recent years, including an operating loss of $17,399 last year. RJM was able to turn that around this year by aggressively cutti costs. The summarized financial results for RJM are shown below: Gross sales: Less variable costs Direct materials Direct labor Total contribution margin Current Year $935,340 589,328 330,120 $ 95,892 Prior Year $ 1,277,256 756,960 485,640 $ 34,656

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 pr in recent years, including an operating loss of $17,399 last year. RJM was able to turn that around this year by aggressively cutti 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 $935,340 509,328 330,120 $ 95,892 33,509 $ 62,383 Prior Year $ 1,277,256 756,960 485,640 $ 34,656 52,055 $ (17,399) 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 Prior Year 39,300 45,600 Price $ 23.80 $28.01 Direct materials cost per unit of material $ 7.20 $ 8.30 Direct materials required per unit 1.80 2,00 0.75 0.60 Direct labor required per unit Wage rate ($/hour) $14.00 $14.20 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.
Transcribed Image Text:RJM Enterprises is a manufacturer of consumer electronics products. The industry is very competitive, and RJM has seen its pr in recent years, including an operating loss of $17,399 last year. RJM was able to turn that around this year by aggressively cutti 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 $935,340 509,328 330,120 $ 95,892 33,509 $ 62,383 Prior Year $ 1,277,256 756,960 485,640 $ 34,656 52,055 $ (17,399) 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 Prior Year 39,300 45,600 Price $ 23.80 $28.01 Direct materials cost per unit of material $ 7.20 $ 8.30 Direct materials required per unit 1.80 2,00 0.75 0.60 Direct labor required per unit Wage rate ($/hour) $14.00 $14.20 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.
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