After reviewing the data on the Contribution Margin Data panel, complete the con
ID: 2466906 • Letter: A
Question
After reviewing the data on the Contribution Margin Data panel, complete the contribution margin analysis below. For those boxes in which you must enter subtracted or negative numbers use a minus sign
Saxon, Inc.
Contribution Margin Analysis
1
Planned contribution margin
2
Effect of changes in sales:
3
Sales quantity factor
4
Unit price factor
5
Total effect of changes in sales
6
Effect of changes in variable cost of goods sold:
7
Variable cost quantity factor
8
Unit cost factor
9
Total effect of changes in variable cost of goods sold
10
Effect of changes in selling and administrative expenses:
11
Variable cost quantity factor
12
Unit cost factor
13
Total effect of changes in selling and administrative expenses
14
Actual contribution margin
For planning and control purposes, managers often compare planned and actual contribution margins. Variable costing is used as a basis for such analyses.
Examine the contribution margin data below, and then complete the Contribution Margin Analysis panel.
Saxon, Inc.
Contribution Margin Data Schedule
Actual
Planned
Sales
$1,280,000
$1,190,000
Less variable cost of goods sold
$480,000
$462,000
Less variable selling and administrative expenses
208,000
154,000
Total
$688,000
$616,000
Contribution margin
$592,000
$574,000
Number of units sold
16,000
14,000
Per unit:
Sales price
$80.00
$85.00
Variable cost of goods sold
$30.00
$33.00
Variable selling and administrative expenses
$13.00
$11.00
Saxon, Inc.
Contribution Margin Analysis
Explanation / Answer
Answer
1
Planned contribution margin
$574,000
2
Effect of changes in sales:
3
Sales quantity factor
2000
(16000-14000)
4
Unit price factor
-5
($ 80 - $ 85)
5
Total effect of changes in sales
$ 90000
($ 1,280,000 - $ 1,190,000)
6
Effect of changes in variable cost of goods sold:
7
Variable cost quantity factor
2000
(16000 – 14000)
8
Unit cost factor
-3
($30 – $33)
9
Total effect of changes in variable cost of goods sold
$ 18000
($480,000 - $ 462,000)
10
Effect of changes in selling and administrative expenses:
11
Variable cost quantity factor
2000
(16000 -14000)
12
Unit cost factor
$ 2
($13 – $11)
13
Total effect of changes in selling and administrative expenses
$ 54000
($ 208,000 - $ 154,000)
14
Actual contribution margin
$592,000
1
Planned contribution margin
$574,000
2
Effect of changes in sales:
3
Sales quantity factor
2000
(16000-14000)
4
Unit price factor
-5
($ 80 - $ 85)
5
Total effect of changes in sales
$ 90000
($ 1,280,000 - $ 1,190,000)
6
Effect of changes in variable cost of goods sold:
7
Variable cost quantity factor
2000
(16000 – 14000)
8
Unit cost factor
-3
($30 – $33)
9
Total effect of changes in variable cost of goods sold
$ 18000
($480,000 - $ 462,000)
10
Effect of changes in selling and administrative expenses:
11
Variable cost quantity factor
2000
(16000 -14000)
12
Unit cost factor
$ 2
($13 – $11)
13
Total effect of changes in selling and administrative expenses
$ 54000
($ 208,000 - $ 154,000)
14
Actual contribution margin
$592,000