Booth Company had sales in $2020$ of $$1,875,000$ on $75,000$ units. Variable costs totaled $$1,125,000$ and fixed costs totaled $$500,000.$

A new raw material is available that will decrease the variable costs per unit by $20\%($or $$3\mathrm{.}00).$ However, to proces the new

material, fixed operating costs will increase by $$125,000.$ Management feels that two$-$thirds of the decline in the variable cost

unit should be passed on to customers in the form of a sales price reduction. The marketing department expects that this sales price

reduction will result in a $4\%$ increase in the number of units sold.

$($a$1)$

Your answer is partially correct.

Prepare a projected CVP income statement for $2020$ assuming the changes have not been made.

Booth Company

CVP Income Statement

For the Year Ended December $31,2020$

Sales

$

Variable Costs

Contribution Margin

Fixed Costs

Net Income$/($Loss$)$