Cullumber Corp.'s sales slumped badly in 2020. For the first time in its history, It operated at a loss. The company's income statement showed the following results from selling 555,500 units of product: sales $2,777,500, total costs and expenses $2,869,375, and net loss $91,875. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,358,315 $1,905,365 $452,950 Selling expenses 277,750 102,212 175,538 Administrative expenses 233,310 75,548 157,762 $2,869,375 $2,083,125 $786,250 Management is considering the following independent alternatives for 2021. 1. Increase unit selling price 25% with no change in costs, expenses, and sales volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $166,650 to total salaries of $66,660 plus a 5% commission on sales. Pharoah Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60 cents per 16-ounce bottle to retailers, who charge customers 75 cents per bottle. For the year 2020, management estimates the following revenues and costs. Sales $1,800,000 Selling expenses--variable $93,000 Direct materials 410,000 Selling expenses-fixed 65,000 Direct labor 400,000 Administrative expenses-variable 27,000 Manufacturing overhead-variable 420,000 Administrative expenses-fixed 55,000 Manufacturing overhead-fixed 150,000 Prepare a CVP Income statement for 2020 based on management's estimates. PHAROAH COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2020 Sales 1800000 Cullumber Corp.'s sales slumped badly in 2020. For the first time in its history, It operated at a loss. The company's income statement showed the following results from selling 555,500 units of product: sales $2,777,500, total costs and expenses $2,869,375, and net loss $91,875. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,358,315 $1,905,365 $452,950 Selling expenses 277,750 102,212 175,538 Administrative expenses 233,310 75,548 157,762 $2,869,375 $2,083,125 $786,250 Management is considering the following independent alternatives for 2021. 1. Increase unit selling price 25% with no change in costs, expenses, and sales volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $166,650 to total salaries of $66,660 plus a 5% commission on sales. Pharoah Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60 cents per 16-ounce bottle to retailers, who charge customers 75 cents per bottle. For the year 2020, management estimates the following revenues and costs. Sales $1,800,000 Selling expenses--variable $93,000 Direct materials 410,000 Selling expenses-fixed 65,000 Direct labor 400,000 Administrative expenses-variable 27,000 Manufacturing overhead-variable 420,000 Administrative expenses-fixed 55,000 Manufacturing overhead-fixed 150,000 Prepare a CVP Income statement for 2020 based on management's estimates. PHAROAH COMPANY CVP Income Statement (Estimated) For the Year Ending December 31, 2020 Sales 1800000
