Practise defining, calculating and explaining contribution per unit and total contribution in IB Business Management SL decisions.
In 2022, AH’s costs increased, but it kept prices unchanged. For 2023, AH decided to change its pricing strategy and pass on all cost increases to customers.
Table 2: Selected financial information for AH for 2022 and forecasted financial information for 2023
Alfombras Horizonte (AH)
Alfombras Horizonte (AH) produces natural henequen* rugs in Yucatán, Mexico, and sells them online. AH rugs are very popular among young people because of their eco-friendly materials and AH's mission statement: "We are responsible with Mother Earth for our environment and ourselves."
In 2022, AH's costs increased, but it kept prices unchanged. For 2023, AH decided to change its pricing
strategy and pass on all cost increases to customers.
Table 2: Selected financial information for \(\boldsymbol{A
* henequen: a fibre plant from Mexico and Guatemala. Fabrics made from henequen fibre are used to make a wide variety of products, including bags, rugs and hammocks.
Explain whether A H's change in pricing strategy for 2023 will have an impact on its unit contribution.