Select Audio Inc. sells electronic equipment. Management decided early in the year to reduce the price of

Question:

Select Audio Inc. sells electronic equipment. Management decided early in the year to reduce the price of the speakers in order to increase sales volume. As a result, for the year ended December 31, the sales increased by $31,875 from the planned level of $1,048,125. The following information is available from the accounting records for the year ended December 31.

A. Prepare an analysis of the sales quantity and unit price factors.
B. Did the price decrease generate sufficient volume to result in a net increase in contribution margin if the actual variable cost per unit was $10, as planned?

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...