Mathews Company manufactures only one product. For the year ended December 31, t
ID: 2791348 • Letter: M
Question
Mathews Company manufactures only one product. For the year ended December 31, the contribution margin increased by $15,810 from the planned level of $477,090. The president of Mathews Company has expressed some concern about this increase and has requested a follow-up report.
The following data have been gathered from the accounting records for the year ended December 31:
Required:
1. Prepare a contribution margin analysis report for the year ended December 31.
Actual
Planned Difference—Increase (Decrease) Sales $948,600 $932,976 $15,624 Variable costs: Variable cost of goods sold $362,700 $381,672 $(18,972) Variable selling and administrative expenses 93,000 74,214 18,786 Total variable costs $455,700 $455,886 $(186) Contribution margin $492,900 $477,090 $15,810 Number of units sold 9,300 10,602 Per unit: Sales price $102 $88 Variable cost of goods sold 39 36 Variable selling and administrative expenses 10 7
Explanation / Answer
Mathews Company Contribution Margin Analysis For the Year Ended December 31 Planned contribution margin------------------------1 477090 Effect of change in sales: Sales quantity factor Variance=(9300-10602)*88= -114576 Unit price factor variance=(102-88)*9300= 130200 Total effect of change in sales------------------------2 15624 Effect of changes in variable cost of goods sold: Variable cost quantity factor(9300-10602)*36 46872 Unit cost factor(39-36)*9300 -27900 Total effect of changes in variable cost of goods sold----------------3 18972 Effect of changes in variable selling and administrative expenses: Variable cost quantity factor(9300-10602)*7 -9114 Unit cost factor (10-7)*9300 27900 Total effect of changes in variable selling and administrative expenses-----------------------------4 18786 Actual contribution margin-------------------1+2+3-4 492900