Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Booth Company had sales in 2020 of $ 1,730.000 on 69.200 units. Variable costs totaled $ 1.038.000 and fixed costs totaled $ 491,000. A new
Booth Company had sales in 2020 of $ 1,730.000 on 69.200 units. Variable costs totaled $ 1.038.000 and fixed costs totaled $ 491,000. 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 $ 130,000. 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. (21) Your answer is 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 $ 1730000 Variable Costs 1038000 Contribution Margin 692000 Less Fixed Costs 491000 Net Income/ Loss) 201000 (22) Your answer is correct. Prepare a projected CVP income statement for 2020 assuming that changes are made as described. Booth Company CVP Income Statement For the Year Ended December 31, 2020 Sales $ 1655264 Variable Costs 863616 Contribution Margin 791648 Less Fixed Costs 621000 1 Net Income/(Loss) $ $ 170648 e Textbook and Media Before Booth Company had the chance to implement usage of the new raw material, new industry specifications were announced and result in the following changes for the Booth Company. Variable costs will increase by 15% per unit and fixed costs will increase by $ 47,000. Management feels that a $3 per unit price increase is needed to accommodate the cost increases. However, this will result in a 10% decrease in units sold. Prepare a CVP income statement assuming these changes have been made. Booth Company CVP Income Statement For the Year Ended December 31, 2020 Sales $ Variable Costs Contribution Margin Less Fixed Costs Net Income/(Loss) $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started