Contribution Margin AnalysisVariable Costs

The following data for Romero Products Inc. are available:

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Prepare a contribution analysis of the variable costs for Romero Products Inc. for the year ended December 31, 2014.

Romero Products Inc.
Contribution Margin AnalysisVariable Costs
For the Year Ended December 31, 2014
Effect of changes in variable costs of goods sold:
Variable cost quantity factor	$
Unit cost factor
Total effect of change in variable cost of goods sold	$
Effect of changes in variable selling and administrative expenses:
Variable cost quantity factor	$
Unit cost factor
Total effect of changes in selling and administrative expenses
Decrease in contribution margin from change in variable costs	$

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1. Calculate the effect of changes in variable cost of goods sold as the difference between the variable cost quantity factor and the unit cost factor.

2. Calculate the effect of changes in variable administrative expenses as the difference between the variable cost quality factor and the unit cost factor.

3. Add the effects from (1) and (2) to obtain the increase or decrease in contribution margin from the change in variable costs.