Costello Industries Inc. manufactures only one product. For the year ended December 31, 2012, the contribution margin
Question:
1. Prepare a contribution margin analysis report for the year ended December 31, 2012.
2. At a meeting of the board of directors on January 30, 2013, the president, after reviewing the contribution margin analysis report, made the following comment: It looks as if the price increase of $15 had the effect of decreasing sales volume. However, this was a 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 $130 and continue this favorable trade off between higher price and lower volume. Do you agree with the presidents comment? Explain.
Step by Step Answer:
Financial and Managerial Accounting Using Excel for Success
ISBN: 978-1111993979
1st edition
Authors: James Reeve, Carl S. Warren, Jonathan Duchac