Digby 's product manager is considering lowering the price of the Drat product by $2 50 and wants to know what the impact will be on the product 's contribution margin Assuming no inventory carry costs, what will Drat 's contribution margin be if the price is lowered Sales $21,154 (income statement...

D 3400 Contribution Margin Net Revenue Variable Expenses Total Material Cost 604143 ...

Digby's product manager is considering lowering the price of the Drat product by $2.50 and wants to

Question:

Digby's product manager is considering lowering the price of the Drat product by $2.50 and wants to know what the impact will be on the product's . Assuming no inventory carry costs, what will Drat's be if the price is lowered?
Sales: $21,154 (income statement)
Material cost: 14.36 (production information)
Labor cost: 7.09 (production information)
Units sold: 604 (production information)
Price: $35 (segment analysis)
A. 31.58%
B. 30.00%
C. 32.30%
D. 34.00%
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...