If variable cost of goods sold totaled $90,000 for the year (18,000 units at $5.00 each)and the planned variable cost of goods sold totaled $86,400 (16,000 units at $5.40 each),the effect of the quantity factor on the change in contribution margin is:
A) $10,800 decrease
B) $10,800 increase
C) $10,000 increase
D) $10,000 decrease

Question

Quizplus · Accepted Answer

The quantity factor caused a decrease in contribution margin of $10,800. This is because the actual variable cost of goods sold was $90,000, while the planned variable cost of goods sold was $86,400. The difference of $3,600 is due to the fact that the actual number of units sold was 18,000, while the planned number of units sold was 16,000. This difference of 2,000 units, multiplied by the variable cost per unit of $5.40, results in a decrease in contribution margin of $10,800.

If Variable Cost of Goods Sold Totaled $90,000 for the Year