Question
Variable Costing Income Statement and Contribution Margin Analysis for a Service Company The actual and planned data for Underwater University for the Fall term were
Variable Costing Income Statement and Contribution Margin Analysis for a Service Company
The actual and planned data for Underwater University for the Fall term were as follows:
Actual | Planned | |||
Enrollment | 4,500 | 4,125 | ||
Tuition per credit hour | $120 | $135 | ||
Credit hours | 60,450 | 43,200 | ||
Registration, records, and marketing cost per enrolled student | $275 | $275 | ||
Instructional costs per credit hour | $64 | $60 | ||
Depreciation on classrooms and equipment | $825,600 | $825,600 |
Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours. Depreciation is a fixed cost.
a. Prepare a variable costing income statement showing the contribution margin and income from operations for the Fall term.
Underwater University | |
Variable Costing Income Statement | |
For the Fall Term | |
Revenue | $ |
Variable costs: | |
Registration, records, and marketing cost | $ |
Instructional costs | |
Total variable costs | $ |
Contribution margin | $ |
Depreciation on classrooms and equipment | |
Income from operations | $ |
b. Prepare a contribution margin analysis report comparing planned with actual performance for the Fall term. If an amount is zero, enter "0".
Underwater University | ||
Contribution Margin Analysis | ||
For the Fall Term | ||
Planned contribution margin | $ | |
Effect of change in revenue: | ||
Revenue quantity factor | $ | |
Unit price factor | ||
Total effect of change in revenue | ||
Effect of changes in registration, records, and marketing costs: | ||
Variable cost quantity factor | $ | |
Unit cost factor | ||
Total effect of changes in registration, records, and marketing costs | ||
Effect of changes in instructional costs: | ||
Variable cost quantity factor | $ | |
Unit cost factor | ||
Total effect of changes in instructional cost | ||
Actual contribution margin | $
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started