Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 32

Sales and Variable Cost Variances; Current to Prior Year; Review of Chapter 14 RJM Enterprises is a manufacturer of consumer electronics products. The industry is very competitive and RJM has seen its profits fall in recent years, including an operating loss of $18,585 in 2012. RJM was able to turn that around in 2013 by aggressively cutting costs. The summarized financial results for RJM are shown below.

Jim Green, the management accountant at RJM, is analyzing the company's performance for 2013, in order explain to management the specific aspects that drove the company to success. Some of the information Jim obtained is:

Assume that RJM, for efficiency and to reduce cost, maintains little or no materials or work in- process inventory.
Required
1. Determine the selling price variance for 2013 based on sales dollars. Determine the volume variance based on contribution margin.
2. Determine the variable cost variances:
a. The usage and price variances for materials.
b. The usage and rate variances for labor.
3. Interpret your findings in requirements 1 and 2 above.