Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

0,1 PR 20-6A Contribution margin analysis factor $12.200.000 the contribution margin increased by $560,000 from the planned level of $5,200,000. There 1. Sales quantity Farr

image text in transcribed
image text in transcribed
0,1 PR 20-6A Contribution margin analysis factor $12.200.000 the contribution margin increased by $560,000 from the planned level of $5,200,000. There 1. Sales quantity Farr Industries Inc. manufactures only one product. For the year ended December dent of Parr Industries Inc. has expressed concern about such a small increase in contra margin and has requested a follow-up report. 1043 Chapter 20 Costo Management Arles December 31 The following dat have been thered from the accounting records for the year ended Diference Increase Decrease 51 400.000 Planned $28.600.000 Actual 530.000.000 Sales Variable costs Variable cost of goods sold Variable selling and administrative expenses Total variable costs Contribution margin Number of units sold Per unit: Sales price Variable cost of goods sold. Variable selling and administrative expenses $21,000,000 2.640.000 524,240,000 $ 5.760,000 120,000 $ 150.000 690,000 $ 340,000 $ 560,000 521450,000 1.950.000 523.400.000 55,200,000 130.000 5220 165 $250 180 22 15 2. Instructions 1. Prepare a contribution margin analysis report for the year ended December 31. At a meeting of the board of directors on January 30, the president, after review- ing the contribution margin analysis report, made the following comment: It looks as if the price increase of $30 had the effect of increasing sales. However, this was a trade-off since sales volume decreased. Also, variable cost of goods sold per unit increased by 515 more than planned. The variable selling and administrative expenses appear out of control. They increased by $7 per unit more than was planned, which is an in crease of over 47% more than was planned. Let's look into these expenses and get them under controll Also, let's con- sider increasing the sales price to $275 and continue this favorable trade-off between higher price and lower volume. Do you agree with the president's comment? Explain

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditors Letter Handbook

Authors: American Bar Association Business Law Section

2nd Edition

161438973X, 978-1614389736

More Books

Students also viewed these Accounting questions

Question

Are my points each supported by at least two subpoints?

Answered: 1 week ago