The following data for Romero Products Inc. are available Difference Increase or

Question

The following data for Romero Products Inc. are available Difference Increase or (Decrease) For the Year Ended December 31 Actual Planned Sales $8,550,000.00 $8,405,000.00 $145,000.00 3 Variable costs: $3,439,000.00 $3,218,500.00 $220,500.00 900000(133,000.00) $87,500.00 $57500.00 Vaiabl cost of goods sold 5 Variable selling and administrative expenses 6 Total variable costs 7Contribution margin 8 Number of units sold 9 Per unit 10 Sales price 11 Variable cost of goods sold 12 Variable selling and administrative expenses 646,000.00 $4,085,000.00 3,997,500.00 $4,465,000.00 $4,407500.00 41,000.00 38,000.00 $225.00 90.50 17.00 $205.00 78.50 19.00

Explanation / Answer

Solution:

Romero Product Inc. Contribution margin analysis Particulars Details Amount Effect of changes in Sales: Unit Price factor ($225-$205)*38000 $760,000.00 Sales Quantity Factor (38000 - 41000)*$205 -$615,000.00 Total effect of changes in sales $145,000.00 Effect of changes in variable cost of goods sold: Unit cost factor ($78.50 - $90.50)*38000 -$456,000.00 Variable cost quantity factor (41000-38000)$78.50 $235,500.00 Total Effect of changes in variable cost of goods sold -$220,500.00 Effect of changes in variable selling and adminstrative expenses: Unit cost factor ($19 - $17)*38000 $76,000.00 Variable cost quantity factor (41000-38000)$19 $57,000.00 Total Effect of changes in variable selling and administrative expenses $133,000.00 Decrease in contribution margin from change in variable cost -$87,500.00 For the year ended Dec 31 $57,500.00

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