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

question 27

Multiple Choice

If the 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 unit cost factor on the change in contribution margin is:

• A) $6,400 decrease
• B) $6,400 increase
• C) $7,200 increase
• D) $7,200 decrease

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Definitions:

Production Jobs

Positions in manufacturing that involve direct involvement in the creation of products, such as assembly line work or machine operation.

Job-Order Costing

A cost accounting system that assigns costs to specific production batches or jobs, useful for customized or unique products.

Process Costing

An accounting methodology used to allocate costs to units of production in continuous, homogeneous operations, typical in industries like chemicals or food production.

Process Costing System

An accounting method used to apply costs to similar products or services that are mass-produced in a continuous fashion.