09 Jun Question reply to below in 150 words
Question
reply to below in 150 words
If you raise the price of the companies product, then the contribution margin would also increase which will automatically make the break-even point lower. This also means that the company is less likely to incur a loss. This idea is missing a key factor which is that it may affect the sales, drastically depending on the increase in sales price. As a management accountant, it would not be my job to raise that flag, only to provide projections for the two different scenario’s and let the other managers decide how to best strategize in order to maximize profits. If I were to come up with these projections I would want the strategists to also provide a new projection for sales, so that I could give them an honest look at the new contribution margin and decide what the best price to minimize risk at taking a loss is.
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