By how much would total annual income increase above its present level if propos

Question

By how much would total annual income increase above its present level if proposal 3 is accepted? Explain. Contribution margin analysis Dozier Industries Inc. manufactures only one product. For the year ended December 31, the contribution margin increased by $38,500 from the planned level of $1,386,000. The president of Dozier Industries Inc. has expressed some concern about such a small increase and has requested a follow-up report. The following data have been gathered from the accounting records for the year ended December 31: Instructions 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 reviewing the contribution margin analysis report, made the following comment: It looks as if the price increase of $19 had the effect of decreasing sales volume. However, this was a favorable tradeoff. The variable cost of goods sold was less than planned. Apparently, we are efficiently managing our variable cost of goods sold. However, the variable selling and administrative expenses appear out of control. Let's took into these expenses and get them under control! Also, let's consider increasing the sales price to $160 and continue this favorable tradeoff between higher price and lower volume. Do you agree with the president's comment? Explain.

Explanation / Answer

Contribution Margin report For the tear ended december 31 Contribution margin Analysis Actual Budget Amount ($) Amount ($) Sales 2772000 2772000 Less: Variable cost 1058750 1122000 Variable selling 288750 242000 Total 1347500 1364000 Contribution Margin 1424500 1408000 No. of unit sold 19250 22000 Per Unit: Sales Price 144 125 Variable cost of goods sold 55 51 Variable selling and administration 15 11 Contribution Margin 74 63

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.