Booth Company had sales in 2020 of $1,695,000 on 67,800 units. Variable costs totaled $1,017,000 and fixed costs totaled $482,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $3.00). However, to process the new raw material, fixed operating costs will increase by $115,000. Management feels that two-thirds of the decline in the variable costs per 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.

Prepare a projected CVP income statement for 2020 assuming that changes are made as described. CVP INCOME STATEMENT

Sales:

Variable Costs:

Contribution Margin:

Less Fixed Costs:

Net Income: