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1.
S M L Total
Sales
Variable cost of goods sold
Manufacturing margin
Variable operating expenses
Contribution margin
Fixed costs:
Manufacturing costs
Operating expenses
Total fixed costs
Income from operations
2.
Contribution margin for Size M
Less: Reduction in fixed production costs
Reduction in fixed operating expenses
Reduction in annual income from operations
3.
S L Total
Sales
Variable cost of goods sold
Manufacturing margin
Variable operating expenses
Contribution margin
Fixed costs:
Manufacturing costs
Operating expenses (including additional rent)
Total fixed costs
Income from operations
Variable Costing Income Statement
For the Year Ended June 30, 2016
Size
Problem 20(5)-5A
Name:
Section:
VALDESPIN COMPANY
For the Year Ended June 30, 2016
Size
Variable Costing Income Statement
0%
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Instructions
If Proposal 2 is accepted:
VALDESPIN COMPANY
4.
Income from operations, Proposal 3
Income from operations, present conditions (part 1)
Increase in income from operations
If Proposal 3 is accepted:
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1.
S M L Total
Sales 668,000$ 737,300$ 956,160$ 2,361,460$
Variable cost of goods sold 300,000 357,120 437,760 1,094,880
Manufacturing margin 368,000$ 380,180$ 518,400$ 1,266,580$
2.
Contribution margin for Size M 224,680$
Less: Reduction in fixed production costs 46,080$
3.
S L Total
Sales 1,536,400$ 956,160$ 2,492,560$
Variable cost of goods sold 690,000 437,760 1,127,760
4.
For the Year Ended June 30, 2016
Size
If Proposal 3 is accepted:
Problem 20(5)-5A
Name:
Solution
Section:
ON
Variable Costing Income Statement
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Instructions
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VALDESPIN COMPANY
VALDESPIN COMPANY
Variable Costing Income Statement
For the Year Ended June 30, 2016
If Proposal 2 is accepted:
Size
Income from operations, Proposal 3 132,726$
Income from operations, present conditions (part 1) 85,790
An asterisk (*) will appear to the right of an incorrect entry.
1.
S M L Total
Sales
Variable cost of goods sold
Manufacturing margin
Variable operating expenses
Contribution margin
Fixed costs:
Manufacturing costs
Operating expenses
Total fixed costs
Income from operations
2.
Contribution margin for Size M
Less: Reduction in fixed production costs
Reduction in fixed operating expenses
Reduction in annual income from operations
3.
S L Total
Revenue
Variable cost of goods sold
Manufacturing margin
Variable operating expenses
Contribution margin
Fixed costs:
Manufacturing costs
Operating expenses (including additional salary)
Total fixed costs
Income from operations
Problem 20(5)-5B
Name:
Section:
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Instructions
If Proposal 2 is accepted:
KIMBRELL, INC.
Variable Costing Income Statement
For the Year Ended January 31, 2016
Size
KIMBRELL, INC.
For the Year Ended January 31, 2016
Size
Variable Costing Income Statement
0%
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4.
Income from operations, Proposal 3
Income from operations, present conditions (part 1)
Increase in income from operations
If Proposal 3 is accepted:
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1.
S M L Total
Sales 990,000$ 1,087,500$ 945,000$ 3,022,500$
Variable cost of goods sold 538,500 718,500 567,000 1,824,000
Manufacturing margin 451,500$ 369,000$ 378,000$ 1,198,500$
2.
Contribution margin for Size M 260,250$
3.
S L Total
Revenue 2,277,000$ 945,000$ 3,222,000$
Variable cost of goods sold 1,238,550 567,000 1,805,550
Manufacturing margin 1,038,450$ 378,000$ 1,416,450$
4.
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For the Year Ended January 31, 2016
Size
If Proposal 3 is accepted:
Problem 20(5)-5B
Name:
Solution
Section:
ON
Variable Costing Income Statement
KIMBRELL, INC.
KIMBRELL, INC.
Variable Costing Income Statement
For the Year Ended January 31, 2016
If Proposal 2 is accepted:
Size
Income from operations, Proposal 3 106,820$
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1.
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
Effect of changes in variable selling and administrative expenses:
Variable cost quantity factore
Unit cost factorf
Total effect of changes in variable selling and admin. exp.
Actual contribution margin
aDifference in units sold
Planned unit sales price
Sales quantity factor
bDifference in sales price
Actual units sold
Unit price factor
cDifference in units sold
Planned variable cost of goods sold
Variable cost quantity factor
dDifference in unit variable cost of goods sold
Actual units sold
Unit cost factor
eDifference in units sold
Planned unit variable selling and admin. exp.
Variable cost quantity factor
fDifference in unit variable selling and admin. exp.
Actual units sold
Variable cost quantity factor
0%
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Instructions
Contribution Margin Analysis
For the Year Ended December 31
Problem 20(5)-6A
Name:
Section:
DOZIER INDUSTRIES INC.
2.
[Key essay answer here]
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1.
Planned contribution margin 1,386,000$
Effect of change in sales:
Sales quantity factora(343,750)$
Unit price factorb365,750
Total effect of change in sales 22,000$
Effect of changes in variable cost of goods sold:
aDifference in units sold (2,750)
Planned unit sales price $125
Sales quantity factor (343,750)$
dDifference in unit variable cost of goods sold ($4)
Actual units sold 19,250
Unit cost factor (77,000)$
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Problem 20(5)-6A
Name:
Solution
Section:
DOZIER INDUSTRIES INC.
Contribution Margin Analysis
For the Year Ended December 31
ON
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Instructions
2.
The president’s first statement appears correct taken at face value. The president is incorrect regarding
variable cost of goods sold. The majority of the decrease in the variable cost of goods sold was due to
the variable cost quantity factor. However, this decrease was offset by a $4 increase in the variable cost
of goods sold per unit. The contribution margin improved, but some inefficiency reduced the expected
amount of improvement from the variable cost quantity factor.
An asterisk (*) will appear to the right of an incorrect entry. The essay answer will not be graded.
1.
Planned contribution margin
Effect of change in sales:
Sales quantity factora
Unit price factorb
Total effect of change in sales
Effect of changes in variable cost of goods sold:
Variable cost quantity factorc
Unit cost factord
Total effect of changes in variable cost of goods sold
Effect of changes in variable selling and administrative expenses:
Variable cost quantity factore
Unit cost factorf
Total effect of changes in variable selling and admin. exp.
Actual contribution margin
aDifference in units sold
Planned unit sales price
Sales quantity factor
bDifference in sales price
Actual units sold
Unit price factor
cDifference in units sold
Planned variable cost of goods sold
Variable cost quantity factor
dDifference in unit variable cost of goods sold
Actual units sold
Unit cost factor
eDifference in units sold
Planned unit variable selling and admin. exp.
Variable cost quantity factor
fDifference in unit variable selling and admin. exp.
Actual units sold
Variable cost quantity factor
Score:
Key Code:
Instructions
Contribution Margin Analysis
For the Year Ended December 31
Problem 20(5)-6B
Name:
Section:
MATHEWS COMPANY
0%
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2.
[Key essay answer here]
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1.
Planned contribution margin 540,000$
Effect of change in sales:
Sales quantity factora310,500$
Unit price factorb(103,500)
Total effect of change in sales 207,000$
Effect of changes in variable cost of goods sold:
aDifference in units sold 4,500
Planned unit sales price $69
Sales quantity factor 310,500$
bDifference in sales price ($3)
Actual units sold 34,500
Unit price factor (103,500)$
Contribution Margin Analysis
For the Year Ended December 31
ON
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Problem 20(5)-6B
Name:
Solution
Section:
MATHEWS COMPANY
