The following data for Romero Products Inc. are available: For the Year Ended December 31 Actual Planned Difference—Increase or (Decrease) Sales $1,958,400 $1,764,000 $194,400 Variable costs: Variable cost of goods sold $1,040,400 $940,800 $99,600 Variable selling and administrative expenses 204,000 196,000 8,000 Total variable costs $1,244,400 $1,136,800 $107,600 Contribution margin $714,000 $627,200 $86,800 Number of units sold 20,400 19,600 Per unit: Sales price $96 $90 Variable cost of goods sold 51 48 Variable selling and administrative expenses 10 10 Prepare an analysis of the sales quantity and unit price factors. Romero Products Inc. Contribution Margin Analysis—Sales For the Year Ended December 31 Effect of changes in sales: Sales quantity factor $ Unit price factor Total effect of changes in sales $
The following data for Romero Products Inc. are available: For the Year Ended December 31 Actual Planned Difference—Increase or (Decrease) Sales $1,958,400 $1,764,000 $194,400 Variable costs: Variable cost of goods sold $1,040,400 $940,800 $99,600 Variable selling and administrative expenses 204,000 196,000 8,000 Total variable costs $1,244,400 $1,136,800 $107,600 Contribution margin $714,000 $627,200 $86,800 Number of units sold 20,400 19,600 Per unit: Sales price $96 $90 Variable cost of goods sold 51 48 Variable selling and administrative expenses 10 10 Prepare an analysis of the sales quantity and unit price factors. Romero Products Inc. Contribution Margin Analysis—Sales For the Year Ended December 31 Effect of changes in sales: Sales quantity factor $ Unit price factor Total effect of changes in sales $
Chapter1: Financial Statements And Business Decisions
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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.
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Contribution Margin Analysis—Sales
The following data for Romero Products Inc. are available:
For the Year Ended December 31 |
Actual |
Planned |
Difference—Increase or (Decrease) | |||
| Sales | $1,958,400 | $1,764,000 | $194,400 | |||
| Variable costs: | ||||||
| Variable cost of goods sold | $1,040,400 | $940,800 | $99,600 | |||
| Variable selling and administrative expenses | 204,000 | 196,000 | 8,000 | |||
| Total variable costs | $1,244,400 | $1,136,800 | $107,600 | |||
| Contribution margin | $714,000 | $627,200 | $86,800 | |||
| Number of units sold | 20,400 | 19,600 | ||||
| Per unit: | ||||||
| Sales price | $96 | $90 | ||||
| Variable cost of goods sold | 51 | 48 | ||||
| Variable selling and administrative expenses | 10 | 10 |
Prepare an analysis of the sales quantity and unit price factors.
| Romero Products Inc. | ||
| Contribution Margin Analysis—Sales | ||
| For the Year Ended December 31 | ||
| Effect of changes in sales: | ||
| Sales quantity factor | $ | |
| Unit price factor | ||
| Total effect of changes in sales | $ |
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