Contribution margin analysis—sales obj. 5 Buy Best 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.

Actual Planned Increase or

(Decrease)

Sales $1,080,000 $1,048,125 $31,875 Number of units sold 36,000 32,250 3,750 Sales price $30.00 $32.50 $(2.50)

Variable cost per unit $10.00 $10.00 0

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?