Question

The following data for Romero Products Inc. are available:

For the Year Ended December 31 Actual Planned Difference
Sales $8,360,000 $8,200,000 $160,000
Variable costs:
Variable cost of goods sold $3,496,000 $3,280,000 $216,000
Variable selling and administrative expenses 760,000 902,000 (142,000)
Total variable costs $4,256,000 $4,182,000 $74,000
Contribution margin $4,104,000 $4,018,000 $86,000
Number of units sold 38,000 41,000
Per unit:
Sales price $220 $200
Variable cost of goods sold 92 80
Variable selling and administrative expenses 20 22

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

Answer 1

Answer:

Sales quantity factor = - $600,000

Unit price factor = $760,000

Explanation:

sales quantity factor is the effect of change in number of units sold with respect to the budgeted price or planned price.

Unit price factor is the change in price per unit with respect to the actual number of units sold.

Unit price factor $(220-200)×38,000 = $760,000

Sales quantity factor (38,000 - 41,000) × $200 = -$600,000

Kindly see attached picture