Question: Dozier Industries Inc manufactures only one product For the year

Dozier Industries Inc. manufactures only one product. For the year ended December 31, 2014, 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, 2014.

1. Prepare a contribution margin analysis report for the year ended December 31, 2014.
2. At a meeting of the board of directors on January 30, 2015, the president, after reviewing the contribution margin analysis report, made the following comment:
It looks as if the prices increase of $19 bad the effect of decreasing sales volume. However, this was 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 look into these expenses and get them under control! Also, let’s consider increasing the sales price to $160 and continue favorable tradeoff between bigger price and lower volume.
Do you agree with the president’s comment?Explain.
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  • CreatedJune 27, 2014
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