1. Prepare a contribution margin analysis report for the year ended December 31. 2. At a meeting of the board of directors on January 30, the president, after review- ing the contribution margin analysis report, made the following comment: It looks as if the price increase of $30 had the effect of increasing sales. However, this was a trade-off since sales volume decreased. Also, variable cost of goods sold per unit increased by $15 more than planned. The variable selling and administrative expenses appear out of control. They increased by $7 per unit more than was planned, which is an in- crease of over 47% more than was planned. Let's look into these expenses and get them under control! Also, let's con- O sider increasing the sales price to $275 and continue this favorable trade-off between higher price and lower volume. Do you agree with the president's comment? Explain.

1. Prepare a contribution margin analysis report for the year ended December 31. 2. At a meeting of the board of directors on January 30, the president, after review- ing the contribution margin analysis report, made the following comment: It looks as if the price increase of $30 had the effect of increasing sales. However, this was a trade-off since sales volume decreased. Also, variable cost of goods sold per unit increased by $15 more than planned. The variable selling and administrative expenses appear out of control. They increased by $7 per unit more than was planned, which is an in- crease of over 47% more than was planned. Let's look into these expenses and get them under control! Also, let's con- O sider increasing the sales price to $275 and continue this favorable trade-off between higher price and lower volume. Do you agree with the president's comment? Explain.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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