# Clippers Inc. (CI) manufactures two types of garden clippers, a light duty model called the half-inch which is intended for

## Question:

Clippers Inc. (CI) manufactures two types of garden clippers, a light duty model called the "half-inch" which is intended for clipping branches and stems up to one-half inch thick. The "one-inch" model is designed for heavier stems and branches. To boost sales, CI decided at the beginning of 2010 to reduce the price of the half-inch model to better position its price relative to some key competitors. On the other hand, CI felt that the one-inch model was technically superior to competitors' models and decided that a small price increase was appropriate. The data for the current and prior year are as follows:

 2010 2009 Sales units 7,200 6,500 Sales mix for each product Half-inch model 50% 30% One-inch model 50% 70% Price Half-inch model \$12.00 \$14.00 One-inch model \$36.00 \$32.00 Variable cost per unit Half-inch model \$6.00 \$6.00 One-inch model \$8.00 \$8.00 Fixed cost 35,000 35,000

Required
1. Calculate a comparative contribution income statement for CI for 2010 that shows the volume and selling price variances for each product based on contribution margin.
2. Determine the sales mix variance and the sales quantity variance for each product, based on contribution margin.
3. Did the price change have the expected results? Why or whynot?

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Related Book For

## Cost management a strategic approach

ISBN: 978-0073526942

5th edition

Authors: Edward J. Blocher, David E. Stout, Gary Cokins

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