Question
In: Accounting
Mad Co. Has these data regarding the main product it manufactures and sells: 2015 sales 360,000...
Mad
Co. Has these data regarding the main product it manufactures and
sells:
2015 sales 360,000
2016 Gross Profit 109,200
Cost Variance 100,800 Unfavorable
For the year ended December 31, 2015, the firm sold the
product at 100% above cost. Unit cost of product increased by 20%
during 2016. What is the percentage increase or decrease in units
sold?
Solutions
Expert Solution
|
2015 Sales |
360000 | |||||||
|
2016 Gross Profit |
109200 | |||||||
| Cost Variance | 100800 | Unfavourable | ||||||
| A | For 2015 Cost = Sales minus profit 360000/2 = 180000 | |||||||
| For the year ended December 31, 2015, the firm sold the product at 100% above cost. (given) | ||||||||
| B | Cost for 2016 = Cost for 2015 plus cost variance | |||||||
| = 180000+100800= 280800 | ||||||||
| C | Cost for 2016 at 2015 cost level = Current cost less cost increase | |||||||
| Unit cost of product increased by 20% during 2016.(given) | ||||||||
| = 280800 - 280800*20/120 = 234000 | ||||||||
| D | percentage increase or decrease in units sold = (Cost 2016 / Cost 2015) - 1 | |||||||
| = (234000/180000) - 1 | ||||||||
| = 30% | ||||||||
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