Problem 6. Highland Coffee Company is concerned with its gross profit negating the increase of its sales. It presents the following data for two species of coffee, Arabica and Robusta, for 2020 and 2019: 2020 2019 Kilos Price/Kg. Amount Kilos Price/Kg. Amount Net sales Arabica 12,000 P390 P4,680,000 10,500 P400 P4,200,000 Robusta 10,000 360 3,600,000 8,280,000 11,000 330 3.630,000 7,830,000 Totals Cost of goods sold Arabica 320 3,840,000 350 3,675,000 Robusta 300 3,000,000 240 2,640,000 Totals 6,840,000 6,315,000 P1,440,000 Required: Calculate and analyze the gross profit variance. Gross profit P1,515.000

Q: How I can calculate the gross margin?

A: Gross margin formula Sale-Cost of goods sold

Q: What is the Importance of the Profit Ratio?

A: Profit ratio: Profit ratio is utilized to assess the corporation's capacity to make revenue as…

Q: Define sales volume variance.

A: Sales volume variance (also known as sales quantity variance) occurs when the actual quantity of…

Q: explain what is Net profit margin with a comprehensive example

A: The objective of this question is to understand the concept of Net Profit Margin, a key…

Q: What is Re-order quantity? What is Re-order level? What is Maximum stocklevel? With respect to…

A: Inventory management consist of various levels namely re-order level, re-order quantity, maximum and…

Q: significant of variance analysis in cost management.

A: Variance analysis is a tool in cost management to compare and analyze variations in budgeted costs…

Q: What's the difference between the profit margin and gross margin ratio?

A: Ratio is the arithmetic relationship between two figures. Accounting ratios shows the…

Q: Explain cost of goods sold budget.

A: Budgeting is a process to prepare the financial statement by the manager to estimate the…

Q: Define average return

A: The formula to compute average return as follows:

Q: Explain direct labour efficiency variance.

A: Variance: Variance refers to the difference level in the actual cost incurred and standard cost. The…

Q: Define direct material variance.

A: Variance:   Variance refers to the difference level in the actual cost incurred and standard cost.…

Q: Explain and describe the overhead variance.

A: Variance means when the actual cost does not match with the estimated costs. To compute the…

Q: Describe the Unit-Profit or Unit-Cost Calculation?

A: A unit cost is a net expense a firm has incurred to manufacture, store, and sell one unit of a…

Q: Draw up a marginal statement that calculates the contribution per uni

A: Marginal costing seems to be a costing method whereby all variable expenses are included in the…

Q: How to calculate gross margin and gross sales

A: Sales means the amount recorded in books as revenue earned by selling the goods or services. Account…

Q: Merits and demerits of the cost value profit analysis CVP

A: Lets understand the basics. Cost volume profit analysis (CVP) is as name suggest analysis of total…

Q: he Thotho income statement variable costing

A: In variable costing income statement, the sale revenue is reduced by all the variable cost to arrive…

Q: Define the term Income Smoothing.

A: Income Smoothing: It is an accounting technique which is used to move revenues and expenses of one…

Q: Assume the variance is material, what is the adjustment of the cost of good sold

A: Solution: Adjustment cost of goods sold vary based on variance in material or immaterial.

Q: How do I calculate the gross margin value under the FIFO, LIFO, and weighted average methods.

A: Gross Margin refers to the profit earned  during an accounting period. Therefore, it is also called…

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance. 

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.