Lesso Company manufactures only one product. For the year ended December 31, 2010, the contribution margin decreased by $56,000 from the planned level of $240,000. The president of Lesso Company has expressed some concern about this decrease and has requested a follow-up report. The following data have been gathered from the accounting records for the year ended December 31, 2010:

Instructions
1. Prepare a contribution margin analysis report for the year ended December 31, 2010.
2. At a meeting of the board of directors on January 30, 2011, the president, after reviewing the contribution margin analysis report, made the following comment:
"It looks as if the price decrease of $2.00 had the effect of increasing sales. However, we lost control over the variable cost of goods sold and variable selling and administrative expenses. Let's look into these expenses and get them under control! Also, let's consider decreasing the sales price to $40 to increase sales further."
Do you agree with the president's comment?Explain.

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Difference- Increase or Decrease) $ 92,000 Actual Planned Sales Less: $1,012,000 920,000 460,000 40,000 s 20 Variable cost of goods sold Variable selling and administrative expenses Total 368,000 828,000 .. . 184,000 240,000 S680,000 $240,000 $ 20,000 128,000 $148,000 $(56,000 Contribution margin. . Number of units sold . . Per unit: .. . 23,000 20,000 Sales price Variable cost of goods sold Variable selling and administrative expenses $44.00 20.00 16.00 $46.00 22.00 12.00