Dozier Industries Inc. manufactures only one product. For the year ended December 31, 2014, the contribution margin
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. Lets look into these expenses and get them under control! Also, lets consider increasing the sales price to $160 and continue favorable tradeoff between bigger price and lower volume.
Do you agree with the presidents comment?Explain.
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...
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