Sales and Variable Cost Variances; Current to Prior Year; Review of Chapter 14 RJM Enterpr...

Sales and Variable Cost Variances; Current to Prior Year; Review of Chapter 14 RJM Enterprises is a manufacturer of consumer electronics products. The industry is very competitive and RJM has seen its profits fall in recent years, including an operating loss of $18,585 last year. RJM was able to turn that around this year by aggressively cutting costs. The summarized financial results for RJM are shown below.

Jim Green, the management accountant at RJM, is analyzing the company’s performance for this year, in order explain to management the specific aspects that drove the company to success. Some of the information Jim obtained is:

Assume that RJM, for efficiency and to reduce cost, maintains little or no materials or work-inprocess inventory.

Required

1. Determine the selling price variance for the current year based on sales dollars. Determine the volume variance based on contribution margin.

---

2. Determine the variable cost variances:

a. The usage and price variances for materials.

---

b. The usage and rate variances for labor.

---

3. Interpret your findings in requirements 1 and 2 above.