Question

Contribution Margin Analysis—Sales

The following data for Romero Products Inc. are available:

For the Year Ended December 31	Actual		Planned		Difference—Increase or (Decrease)
Sales	$2,294,000		$2,102,400		$191,600
Variable costs:
Variable cost of goods sold	$1,213,600		$1,108,800		$104,800
Variable selling and administrative expenses	236,800		230,400		6,400
Total variable costs	$1,450,400		$1,339,200		$111,200
Contribution margin	$843,600		$763,200		$80,400
Number of units sold	14,800		14,400
Per unit:
Sales price	$155		$146
Variable cost of goods sold	82		77
Variable selling and administrative expenses	16		16

Prepare an analysis of the sales quantity and unit price factors.

Romero Products Inc.
Contribution Margin Analysis—Sales
For the Year Ended December 31
Effect of changes in sales:
Sales quantity factor	$
Unit price factor
Total effect of changes in sales		$

Answer 1

Contribution margin analysis :

Effect of changes in sales
Sales quantity factor (14400-14800)*146	58,400 F
Unit price factor (146-155)*14800	133,200 F
Total effect of changes in sales		191,600 F