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Pricing and Profitability Analysis Activity
Pricing and Profitability Analysis Activity
The gross profit of J Corporation for 2020 and 2021 are given below:
2020 2021 Increase or ( Decrease )
Sales P8,000,000 P12,000,000 P4,000,000
Less: Cost of Sales P6,000,000 P10,800,000 P4,800,000
Gross Profit P2,000,000 P1,200,000 (P800,000)
Units Sold 50,000 48,000 (2,000)
Unit Sales Price P160.00 P250.00 P90.00
Unit Cost Price P120.00 P225.00 P105.00
2020 ` 2021
Sales P8,000,000 P12,000,000
Less:Variable Costs P6,000,000 P8,000,000
Contribution Margin P2,000,000 P4,000,000
The number of units sold increased by 5%.
For items 3 to 6, don’t forget to indicate whether Favorable ( F ) or Unfavorable ( UF )
3. sales price variance ratio?
P12,000,000 – P10,000,000 = P2,000,000 F
4. sales quantity variance ratio?
P10,000,000 – P8,000,000 = P2,000,000 F
5. cost price variance ratio?
CVP = 8,000,000-6,300,000 = 1,700,000 UF
CPVR = 1,700,000/6,300,000 = 26.98% UF
6. cost quantity variance ratio?
6,300,000-6,000,000 = P300,000 UF
300,000/6,000,000 = 5% UF
J Corporation presents the following data for two types of products, A and B, for 2020 and
2021:
2020 2021
Units Per Unit Amount Units Per Unit Amount
Sales:
A 8,000 P8.00 P64,000 12,000 P10.00 P120,000
B 8,000 P4.00 P32,000 20,000 P6.00 P120,000
P96,000 P240,000
Cost of goods sold
A 8,000 P6.00 P48,000 12,000 P9.00 P108,000
B 8,000 P3.00 P24,000 20,000 P5.00 P100,000
P72,000 P208,000
Gross profit 16,000 P1.50 P24,000 32,000 P1.00 P32,000
7. sales price variance?
A= (P2 x 12,000) P24,000 F
B = (P2 x 20,000) P40,000 F
Total P64,000 F
8. cost price variance?
A= (P3 x 12,000) P36,000 F
B= (P2 x 20,000) P40,000 F
Total P76,000 F
9. sales mix variance?
A= (12,000 units = P2) P24,000
B= (20,000 units = P8) P160,000
Total P184,000
Less: (P48,000) UF
Total P136,000 F
10. sales volume variance?
32,000 = P1.5 P48,000
Less: (P24,000)
Total P24,00 F