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Carey Company had sales in 2016 of $1,586,000 on 61,000 units. Variable costs totaled $854,000, and fixed costs totaled $450,000. A new raw material is
Carey Company had sales in 2016 of $1,586,000 on 61,000 units. Variable costs totaled $854,000, and fixed costs totaled $450,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $2.80). However, to process the new raw material, fixed operating costs will increase by $90,000. Management feels that one-half 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 5% increase in the number of units sold. Prepare a projected CVP income statement for 2017, assuming the changes have not been made. (Round per unit cost to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 1,225.) Prepare a projected CVP income statement for 2017, assuming that changes are me described. (Round per unit cost to 2 decimal places, e.g. 5.25 and all other answers 0 decimal places, e.g. 1,225.)
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