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?

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%

ekkarill92 answered 3 years ago

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