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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?

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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 2 years ago
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