Question

Mathews Company manufactures only one product. For the year ended December 31, the contribution margin increased by $41,616 from the planned level of $764,784. The president of Mathews Company has expressed some concern about this increase and has requested a follow-up report.

The following data have been gathered from the accounting records for the year ended December 31:

	Actual		Planned		Difference—Increase (Decrease)
Sales	$1,555,200		$1,513,296		$41,904
Variable costs:
Variable cost of goods sold	$590,400		$618,336		$(27,936)
Variable selling and administrative expenses	158,400		130,176		28,224
Total variable costs	$748,800		$748,512		$(288)
Contribution margin	$806,400		$764,784		$41,616
Number of units sold	14,400		16,272
Per unit:
Sales price	$108		$93
Variable cost of goods sold	41		38
Variable selling and administrative expenses	11		8

Required:

1. Prepare a contribution margin analysis report for the year ended December 31.

Mathews Company
Contribution Margin Analysis
For the Year Ended December 31
Planned contribution margin		$
Effect of changes in sales:
Sales quantity factor	$
Unit price factor
Total effect of changes in sales
Effect of changes in variable cost of goods sold:
Variable cost quantity factor	$
Unit cost factor
Total effect of changes in variable cost of goods sold
Effect of changes in selling and administrative expenses:
Variable cost quantity factor	$
Unit cost factor
Total effect of changes in selling and administrative expenses
Actual contribution margin		$

Answer 1

Mathews Company
Contribution Margin Analysis
For the Year Ended December 31
Planned contribution margin		764784
Effect of changes in sales:
Sales quantity factor	-174096
Unit price factor	216000
Total effect of changes in sales		41904
Effect of changes in variable cost of goods sold:
Variable cost quantity factor	71136
Unit cost factor	-43200
Total effect of changes in variable cost of goods sold		27936
Effect of changes in selling and administrative expenses:
Variable cost quantity factor	14976
Unit cost factor	-43200
Total effect of changes in selling and administrative expenses		-28224
Actual contribution margin		806400

Working:

Difference in units sold	-1872
x Planned unit sales price	93
Sales quantity factor	-174096
Difference in sales price	15
x Actual units sold	14400
Unit price factor	216000
Difference in units sold	1872
x Planned unit variable cost of goods sold	38
Variable cost quantity factor	71136
Difference in unit variable cost of goods sold	-3
x Actual units sold	14400
Unit cost factor	-43200
Difference in units sold	1872
x Planned unit variable selling and admin. Exp.	8
Variable cost quantity factor	14976
Difference in unit variable selling and admin. Exp.	-3
x Actual units sold	14400
Unit cost factor	-43200