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    Master budget profit plan

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    10.23 Analyzing contribution margin changes. The Diaz Company, which sells hard hats for construction, provided the following data for years 1 and 2:
    Year 1 Year 2
    Sales Volume 14,000 hats 10,000 hats
    Sales Revenue 1,750,000 1,500,000
    Variable Costs (1,470,000) (1,050,000)
    Contribution Margin $280,000 $45,000

    What impact the changes in sales volume and in sales price have on contribution margin? (Hint: Compare the actual, flexible budget portion of the profit variance analysis. Use year 1 as the " Master Budget.")

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    The solution explains two questions relating to master budget profit plan. The margin changes for Diaz Company is examined.

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