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8 July, 16:48

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. Determine

(a) the variable cost quantity factor and

(b) the unit cost factor for variable cost of goods sold.

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Answers (1)
  1. 8 July, 16:57
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    Answer: $326,000, $56,000

    Explanation:

    Given the following;

    Actual variable cost = $140

    Planned variable cost = $136

    Actual total units = 14000

    Unit increase = 2000

    Therefore, the total planned unit is given by;

    Actual total unit - unit increase

    14000 - 2400 = 11,600 unit

    A. Variable cost quantity factor is given by;

    Unit increase * planned variable cost

    (11600 - 14000) * $136

    -2400 * $136 = 326,000

    B. Unit cost factor for variable cost of goods sold is given by;

    (planned variable cost - actual variable cost) * actual total units

    ($136 - $140) * 14000

    $4 * 14000 = $56,000
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