using the three methods explained in this section analyze why the business suffered 627621
Instead of the scenario shown in table assume that Company A had a bad year. Its internal operating profit report for this alternative scenario is presented below. Using the three methods explained in this section, analyze why the business suffered a loss for the year.
|
Company A |
||
|
Totals |
Per Unit |
|
|
Sales volume, in units |
120,000 |
|
|
Sales revenue |
$24,000,000 |
$200.00 |
|
Cost of goods sold expense |
$15,600,000 |
$130.00 |
|
Gross margin |
$8,400,000 |
$70.00 |
|
Variable operating expenses |
$3,600,000 |
$30.00 |
|
Contribution margin |
$4,800,000 |
$40.00 |
|
Fixed operating expenses |
$3,000,000 |
$25.00 |
|
Operating profit |
$1,800,000 |
$15.00 |
|
Totals |
Per Unit |
|
|
Sales volume, in units |
120,000 |
|
|
Sales revenue |
$21,000,000 |
$175.00 |
|
Cost of goods sold expense |
$15,600,000 |
$130.00 |
|
Gross margin |
$5,400,000 |
$45.00 |
|
Variable operating expenses |
$3,150,000 |
$26.25 |
|
Contribution margin |
$2,250,000 |
$18.75 |
|
Fixed operating expenses |
$3,000,000 |
$25.00 |
|
Operating profit (loss) |
($750,000) |
($6.25) |