Contribution Margin Analysis—Sales The following data for Gardot Products Inc. a

Question

Contribution Margin Analysis—Sales

The following data for Gardot Products Inc. are available:

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

For the Year Ended December 31

Actual

Planned Difference—Increase or (Decrease) Sales $1,676,400 $1,618,400 $58,000 Less: Variable cost of goods sold $884,400 $856,800 $27,600 Variable selling and administrative expenses 171,600 176,800 -5,200 Total variable costs $1,056,000 $1,033,600 $22,400 Contribution margin $620,400 $584,800 $35,600 Number of units sold 13,200 13,600 Per unit: Sales price $127 $119 Variable cost of goods sold 67 63 Variable selling and administrative expenses 13 13

Explanation / Answer

PLANNED CONTRIBUTION % = $584800/1818400=36%

ACTUAL CONTRIBUTION %= $620400/1676400=37%

IT HAS BEEN OBSERVED THAT THE MORE THE NUMBER OF UNITS PRODUCED, THE CONTRIBUTION MARGIN WILL INCREASE.

Gardot Products Inc. Contribution Margin Analysis—Sales For the Year Ended December 31 Effect of change in sales: Sales quantity factor $58000 Unit price factor $8 Total effect of change in sales $464000

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