Question

The actual variable cost of goods sold for a product was $140 per unit, while the planned variable cost of goods sold was $136 per unit. The volume increased by 2,400 units to 14,000 actual total units. a. Determine the variable cost quantity factor. $ Increase in variable cost of goods sold b. Determine the unit cost factor for variable cost of goods sold.

Answer 1

Answer:

(a) -$326400

(b) -$56000

Explanation:

We have given actual variable cost of goods sold for a product = $140 per unit

Planned variable cost of goods sold = $136 per unit

Volume is increased by 2400 units to 14000 units

So planned units of sales = 14000 - 2400 = 11600

(a) Variable cost quantity factor is given by

Variable cost quantity factor = ( Planned units of sales - actual units of sales )×planned units of cost

= ( 11600 - 14000 ) ×136 = -$326400

(B) Unit cost factor =  ( Planned cost per unit - actual cost per unit )×actual units sold

= ( 136 - 140 ) ×14000 = -$56000