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Variable Costing Income Statement and Contribution Margin Analysis for a Service Company

The actual and planned data for Underwater University for the Fall term were as follows:

	Actual		Planned
Enrollment	4,500		4,125
Tuition per credit hour	$120		$135
Credit hours	60,450		43,200
Registration, records, and marketing cost per enrolled student	$275		$275
Instructional costs per credit hour	$64		$60
Depreciation on classrooms and equipment	$825,600		$825,600

Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours. Depreciation is a fixed cost.

a. Prepare a variable costing income statement showing the contribution margin and income from operations for the Fall term.

Underwater University
Variable Costing Income Statement
For the Fall Term
Revenue	$
Variable costs:
Registration, records, and marketing cost	$
Instructional costs
Total variable costs	$
Contribution margin	$
Depreciation on classrooms and equipment
Income from operations	$

b. Prepare a contribution margin analysis report comparing planned with actual performance for the Fall term. If an amount is zero, enter "0".

Underwater University
Contribution Margin Analysis
For the Fall Term
Planned contribution margin		$
Effect of change in revenue:
Revenue quantity factor	$
Unit price factor
Total effect of change in revenue
Effect of changes in registration, records, and marketing costs:
Variable cost quantity factor	$
Unit cost factor
Total effect of changes in registration, records, and marketing costs
Effect of changes in instructional costs:
Variable cost quantity factor	$
Unit cost factor
Total effect of changes in instructional cost
Actual contribution margin		$

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