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Halo Rain Gear sells monogrammed umbrellas on Etsy. Halo Rain Gear is currently selling 1,800...

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Accounting

Halo Rain Gear sells monogrammed umbrellas on Etsy. Halo Rain Gear is currently selling 1,800 umbrellas a month at a price of $20 per umbrella. The variable cost of each umbrella sold includes $14 to purchase the merchandise from suppliers and a $2 commission paid to Etsy. Fixed costs are $3,000 per month. The company is considering raising the selling price of each umbrella to $30 but believes the number of umbrellas sold would drop by 35% as a result of the price increase. Should Halo Rain Gear raise the selling price of its umbrellas?
Begin by preparing the contribution margin income statement at the current selling price of $20 per umbrella.

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