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Vulcan Supplements makes fuel additives for use in motor racing and uses a standard costing system to monitor both sales and production costs to evaluate
Vulcan Supplements makes fuel additives for use in motor racing and uses a standard costing system to monitor both sales and production costs to evaluate performance. The budgeted sales data for the past month was 40,000 litres however 44,000 litres of product was sold: Budgeted sales: Budgeted unit sell price: $47.00 Budgeted unit variable costs: $35.25 Budgeted unit contribution margin: $11.75 Budgeted sales volume/quantity 40,000 Actual Sales data: Total revenue: $1,964,600 Total units sold: 44000 During the month, the sales manager began a discounting program with its customers to try and increase sales and this 'appears' to have worked with an increase in sales. Calculate whether this discounting has benefited the company in terms of total contribution margin. Assume that the variable costs matched the budgeted variable costs. BRIEFLY comment on the overall outcome. Required: Calculate whether this discounting has benefited the company in terms of total contribution margin. Assume that the variable costs matched the budgeted variable costs. BRIEFLY comment on the overall outcome
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