2.
No, the president is not correct in saying that the variable cost of goods sold got out of control. The
majority of the increase in the variable cost of goods sold was due to the variable cost quantity factor.
Specifically, the increase of 4,500 units in the quantity of product sold increased the variable cost of
goods sold by $148,500, based on planned unit costs. Actually, the unit cost of variable cost of goods
sold decreased $3, which had a favorable effect of $103,500 on the contribution margin.
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a.
Effect of change in sales:
Sales quantity factora
Unit price factorb
Total effect of change in sales
a Difference in sales quantity
Planned sales price
Sales quantity factor
b Difference in sales price
Actual units sold
Sales quantity factor
b.
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Exercise 20(5)-17
Name:
Section:
[Key essay answer here]
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a.
Effect of change in sales:
Sales quantity factora121,875$
Unit price factorb(90,000)
Total effect of change in sales 31,875$
b.
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The sales will increase by $31,875. If the variable cost per unit were $10, and there were
3,750 more units than planned, then the variable cost will increase by $37,500 due to the
Exercise 20(5)-17
Name:
Solution
Section:
ON
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a.
Effect of change in sales:
Sales quantity factora
Unit price factorb
Total effect of change in sales
a Difference in sales quantity
Planned sales price
Sales quantity factor
b Difference in sales price
Actual units sold
Sales quantity factor
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Exercise 20(5)-18
Name:
Section:
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a.
Effect of change in sales:
Sales quantity factora(600,000)$
Unit price factorb760,000
Total effect of change in sales 160,000$
ON
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Exercise 20(5)-18
Name:
Solution
Section:
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a.
Effect of changes in variable costs of goods sold:
Variable cost quantity factora
Unit cost factorb
Total effect of change in variable cost of goods sold
Effect of changes in variable and administrative expenses:
Variable cost quantity factorc
Unit cost factord
Total effect of changes in selling and admin. expenses
Decrease in contribution margin from change in variable costs
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Instructions
ROMERO PRODUCTS INC.
Contribution Margin Analysis⎯Variable Costs
For the Year Ended December 31
Exercise 20(5)-19
Name:
Section:
0%
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a.
Effect of changes in variable costs of goods sold:
Variable cost quantity factora
240,000$
Unit cost factorb(456,000)
Total effect of change in variable cost of goods sold (216,000)$
Effect of changes in variable and administrative expenses:
Variable cost quantity factorc
66,000$
Unit cost factord76,000
Total effect of changes in selling and admin. expenses 142,000
Decrease in contribution margin from change in variable costs (74,000)$
Exercise 20(5)-19
Name:
Solution
Section:
ROMERO PRODUCTS INC.
Contribution Margin Analysis⎯Variable Costs
For the Year Ended December 31
ON
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a.
Rate Quantity
Revenues railcars
Variable costs:
Labor costs for loading/unloading railcars
Fuel costs train-miles
Train crew labor costs train-miles
Switchyard labor costs railcars
Total variable costs
Contribution margin
Contribution margin ratio
b.
Planned contribution margin
Effect of change in sales:
Sales quantity factora
Unit price factorb
Total effect of change in sales
Effect of changes in variable cost of goods sold:
Variable cost quantity factorc
Unit cost factord
Total effect of changes in variable cost of goods sold
Actual contribution margin
aChange in sales quantity
Planned unit variable cost of goods sold
Variable cost quantity factor
bChange in unit variable cost of goods sold
Actual units sold
Sales quantity factor
cChange in sales quantity
Planned unit variable selling & admin.
Sales quantity factor
Contribution Margin Analysis⎯Atlanta/Baltimore Route
For the Month Ended May 31
EAST COAST RAILROAD
Contribution Margin for Atlanta/Baltimore Route
For the Month Ended May 31
EAST COAST RAILROAD
Exercise 20(5)-21
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Section:
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d
Change in unit variable selling & admin.
Actual units sold
Sales quantity factor
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a.
Rate Quantity
Revenues $500 700 railcars 350,000$
Variable costs:
Labor costs for loading/unloading $46.00 700 railcars 32,200$
Fuel costs $12.40 12,835 train-miles 159,154
b.
Planned contribution margin (29,291)$
Effect of change in sales:
Sales quantity factora165,000$
Unit price factorb(70,000)
Total effect of change in sales 95,000$
Effect of changes in variable cost of goods sold:
Unit cost factord–
Exercise 20(5)-21
Name:
Solution
Section:
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ON
Contribution Margin Analysis⎯Atlanta/Baltimore Route
For the Month Ended May 31
EAST COAST RAILROAD
Contribution Margin for Atlanta/Baltimore Route
For the Month Ended May 31
EAST COAST RAILROAD
d
Change in unit variable selling & admin.
$0
An asterisk (*) will appear to the right of an incorrect entry.
a.
Rate Quantity
Revenue credit hours
Variable costs:
Regis., records, and marketing students
Instructional costs credit hours
Total variable costs
Contribution margin
Depreciation on classrooms and equipment
Income from operations
b.
Planned contribution margin
Effect of change in revenue:
Revenue quantity factora
Unit price factorb
Total effect of change in revenue
Effect of changes in registration, records, and marketing costs:
Variable cost quantity factorc
Unit cost factord
Total effect of changes in regis., records, and marketing
Effect of changes in instructional costs:
Variable cost quantity factore
Unit cost factorf
Total effect of changes in instructional costs
Actual contribution margin
aDifference in credit hours
Planned tuition per credit hour
Revenue quantity factor
bDifference in price
Actual credit hours
Unit price factor
cDifference in number of students
0%
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Exercise 20(5)-22
Name:
Section:
Contribution Margin Analysis
For the Fall 2016 Term
UNDERWATER UNIVERSITY
Variable Costing Income Statement
For the Fall 2016 Term
UNDERWATER UNIVERSITY
Planned reg., records, and marketing per student
Variable cost quantity factor
dDifference in reg., records, and mkting. per student
Actual enrollment
Unit cost factor
eDifference in credit hours
Planned instructional cost per hour
Variable cost quantity factor
fDifference in instructional costs per hour
Actual credit hours
Variable cost quantity factor
An asterisk (*) will appear to the right of an incorrect entry.
a.
Rate Quantity
Revenue $120 60,450 credit hours 7,254,000$
Variable costs:
Regis., records, and marketing $275 4,500 students 1,237,500$
b.
Planned contribution margin 2,105,625$
Effect of change in revenue:
Revenue quantity factora2,328,750$
Unit price factorb(906,750)
Variable cost quantity factorc(103,125)$
Unit cost factord–
Unit cost factorf(241,800)
Total effect of change in revenue 1,422,000$
bDifference in price ($15)
Actual credit hours 60,450
Unit price factor (906,750)$
For the Fall 2016 Term
UNDERWATER UNIVERSITY
Variable Costing Income Statement
For the Fall 2016 Term
UNDERWATER UNIVERSITY
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Contribution Margin Analysis
Exercise 20(5)-22
Name:
Solution
Section:
Planned reg., records, and marketing per student $275
Variable cost quantity factor (103,125)$
dDifference in reg., records, and mkting. per student $0
eDifference in credit hours (17,250)
Planned instructional cost per hour $60
Variable cost quantity factor (1,035,000)$
Actual credit hours 60,450
Variable cost quantity factor (241,800)$
Actual enrollment 4,500