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Guthrie Fabrications is a single-product firm facing intense competition. Management at Guthrie predicts that a...

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Accounting

Guthrie Fabrications is a single-product firm facing intense competition. Management at Guthrie predicts that a new marketing strategy will help improve sales in the coming year. The company believes that cutting the sales price per unit will increase sales volume, but expect to see an increase in fixed expenses due to planned additions to Guthrie's productive capacity. Furthermore, Guthrie's suppliers (vendors) have already suggested some materials prices will need to increase in the coming year due to new regulations.

In summary...

  • Sales Price per unit will decrease.
  • Variable Costs per unit will increase.
  • Sales Volume will increase.
  • Fixed Costs in total will increase.

Given the changes suggested above, which of the following effects should management expect to see? Select all that apply.

Contribution margin per unit will increase.

Contribution margin per unit will decrease.

Break-Even Point in units will increase.

Break-Even Point in units will decrease.

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