Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Carey Company had sales in 2019 of $ 1,842,400 on 65,800 units. Variable costs totaled $ 1,184,400, and fixed costs totaled $ 498,000. A new
Carey Company had sales in 2019 of $ 1,842,400 on 65,800 units. Variable costs totaled $ 1,184,400, and fixed costs totaled $ 498,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $ 3.60). However, to process the new raw material, fixed operating costs will increase by $ 93,000. 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 2020, assuming the changes have not been made. CAREY COMPANY CVP Income Statement For the Year Ended December 31, 2020 Total Per Unit Sales $ 1842400 $ Variable Costs 1184400 18 Contribution Margin 98000 Net Income/(Loss) 160000 (b) Prepare a projected CVP income statement for 2020, assuming that changes are made as described. (Round per unit cost to 2 decimal places, e.g. 5.25 and all other answers to decimal places, e.g. 1,225.) CAREY COMPANY CVP Income Statement For the Year Ended December 31, 2020 Total Per Unit Variable Costs $ $ 14.4 Fixed Costs $
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