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 $3.00). However, to process the new raw material, fixed operating costs will increase by $125,000. 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.

Still implementing the changes in part (b), the marketing department suggests implementing an advertising promotion that would increase variable costs by $0.50 per unit but would retain the original sales volume of 75,000 units. Prepare a CVP income statement with these changes.

Booth Company CVP Income Statement choose the accounting period For the Month Ended December 31, 2020December 31, 2020For the Year Ended December 31, 2020
select an income statement item Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable Costs		$enter a dollar amount
select an income statement item Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable Costs		enter a dollar amount
select a summarizing line for the first part Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable Costs		enter a total amount for the first part
select between addition and deduction AddLess: select an income statement item Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable Costs		enter a dollar amount
select a closing name for this statement Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable Costs		$enter a total net income or loss amount

Do you recommend implementation of the advertising program? Why or why not?

The implementation of the advertising program is select an option recommendednot recommended as the net income would select an option increasedecreasenot change.