Question

1. 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	$1,904,000		$1,720,500		$183,500
   Variable costs:
   Variable cost of goods sold	$1,008,000		$914,500		$93,500
   Variable selling and administrative expenses	192,000		186,000		6,000
   Total variable costs	$1,200,000		$1,100,500		$99,500
   Contribution margin	$704,000		$620,000		$84,000
   Number of units sold	16,000		15,500
   Per unit:
   Sales price	$119		$111
   Variable cost of goods sold	63		59
   Variable selling and administrative expenses	12		12

   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

Answer 1

Answer

Romero Products Inc.
Contribution Margin Analysis—Sales
For the Year Ended December 31
Effect of changes in sales:
Sales quantity factor	$   55,500
Unit price factor	$ 128,000
Total effect of changes in sales		$ 183,500

Calculations:

Romero Products Inc.
Contribution Margin Analysis—Sales
For the Year Ended December 31
Effect of changes in sales:
Sales quantity factor	=(16,000-15,500)*$111
Unit price factor	=($119-$111)*16000 units

In case of any doubt, please comment.