BusA 8 Ch 20

unit price factor (equation)

= (actual selling price per unit - planned selling price per unit) x actual units sold

sales quantity factor

= (actual units sold - planned units of sales) x planned sales price

unit cost factor

= (planned cost per unit - actual cost per unit) x actual units sold

variable cost quantity factor

= (planned unit of sales - actual units sold) x planned unit cost

absorption costing

is required under GAAP for financial statements distributed to external users. the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. both fixed and variable factory costs are included as part of the factory overhead.

contribution margin

manufacturing margin less variable selling and administrative expenses.

manufacturing margin

sales less variable cost of goods sold. variable costs of goods sold consists of direct materials, direct labor, ad variable factory overhead.

variable costing / direct costing

the cost of goods manufactured includes only variable manufacturing costs. thus, cost of goods manufactured includes only variable manufacturing costs. Thus, the cost of good manufactured consists of the following: direct materials, direct labor, and variable factory overhead.

quantity factor

the effect of a difference in the number of units sold, assuming no change in unit sales price or unit costs.

unit price factor

the effect of a difference in unit sales price or unit cost on the number of units sold