Tamarack Outfitters sold 16,000 units at an average price of 250 in 2024 and 20,000 units at an average price of 240 in 2025. Decompose the revenue change into a volume effect (change in units × old price) and a price effect (change in price × new units). Answer in CAD thousands; a decrease is negative.
Tamarack Outfitters sold 16,000 units at an average price of 250 in 2024 and 20,000 units at an average price of 240 in 2025. Decompose the revenue change into a volume effect (change in units × old price) and a price effect (change in price × new units). Answer in CAD thousands; a decrease is negative.
Answer
Volume effect → 1000 · Price effect → -200 · Total change → 800
Cells - Volume effect · ±0 - Price effect · ±0 - Total change · ±0 Volume: (20,000 − 16,000) × 250 = 1,000,000 → 1,000 thousand. Price: (240 − 250) × 20,000 = −200,000 → −200 thousand. Total 800 = 4,800 − 4,000 ✓. Excel: volume `=(C2-B2)*B3`, price `=(C3-B3)*C2` with units in row 2 and price in row 3.
Hermanson Vol 2 ch 22; Bigel ch 8; OpenStax Accounting v2 ch 2