Contribution margin is: a. the excess of sales revenue over variablecost b. anot

Question

Contribution margin is:

a. the excess of sales revenue over variablecost

b. another term for volume in the"cost-volume-profit" analysis

c. profit

Frogue Corporation uses a standard cost system.The following information was provided for the period that justended:

Actual price per kilogram $3.00

Actual kilograms of material used31,000

Actual hourly labor rate $18.10

Actual hours of production 4,900 laborhrs.

Standard price per kilogram $2.80

Standard kilograms per completed unit 6kilograms

Standard hourly labor rate $18.00

Standard time per completed unit 1 hr. <tr>

Actual total factory overhead $34,900

Fixed factory overhead $18,000

Standard fixed factory overhead rate $1.20 perlabor hr

Standard variable factory overhead rate $3.80 perlabor hr

Maximum plant capacity 15,000 hours

Plant operated during the period 10,000hours

Units completed during the period5,000

The direct materials quantity varianceis:

a. $6,200 favorable

b. $2,800 favorable

c. $2,800 unfavorable

d. $6,200 unfavorable

Explanation / Answer

Contribution margin is: a. the excess of sales revenue over variablecost
c. $2,800 unfavorable The direct materials quantity variance is = (Actualquantity used × Standard price) (Standard quantityallowed × Standard Price) Standard kilograms per completed unit 6 kilograms & Unitscompleted during the period =5,000 So direct materials quantity variance = (31000 kg * $2.80) -((5000 unit*6kg/unit) * $2.80) direct materials quantity variance = 86,800 - 84000 = 2800Unfavorable

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