Carey Company had sales in 2016 of $1,792,200 on 61,800 units. Variable costs totaled $865,200, and fixed costs totaled $487,000. 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 $107,000. 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.

(a) Prepare a projected CVP income statement for 2017, assuming the changes have not been made.

(b) Prepare a projected CVP income statement for 2017, assuming that changes are made as described