Crane Company had sales in $2021$ of $$1,890,000$ on $60,000$ units. Variable costs totaled $$1,134,000,$ and fixed costs totaled $$630,000.$

A new raw material is available that will decrease the unit variable costs by $20\%($or $$3\mathrm{.}78).$ However, to process the new raw material,

fixed operating costs will increase by $$126,000.$ Management feels that one half of the decline in the unit variable costs 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 $2022,$ assuming the changes have not been made. $($Round per unit cost to $2$ decimal

places, e$.$g$.5\mathrm{.}25$ and all other answers to $0$ decimal places, e$.$g$.1,225.)$

CRANE COMPANY

CVP Income Statement

$($b$)$ Prepare a projected CVP income statement for $2022,$ assuming that changes are made as described. $($Round per unit cost to $2$ decimal

places, e$.$g$.5\mathrm{.}25$ and all other answers to $0$ decimal places, e$.$g$.1,225.)$

CRANE COMPANY

CVP Income Statement

Total

Sales

Variable Costs

Contribution Margin