Exercise 194 Malone Company had sales in 2014 of $1,600,000 on 80,000 units. Variable costs totaled $960,000, and fixed costs totaled $400,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $2.40). However, to process the new raw material, fixed operating costs will increase by $40,000. 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 CVP income statement for 2014, assuming the changes are made as described.

MALONE COMPANY CVP Income Statement (Current) For the Year Ended December 31, 2014
Total	Per Unit
Contribution marginVariable expensesNet income / (Loss)Sales revenueFixed costs	$	$
Variable expensesContribution marginSales revenueNet income / (Loss)Fixed costs
Fixed costsNet income / (Loss)Variable expensesSales revenueContribution margin		$
Sales revenueNet income / (Loss)Variable expensesContribution marginFixed costs
Fixed costsContribution marginNet income / (Loss)Variable expensesSales revenue	$

MALONE COMPANY CVP Income Statement (with changes) For the Year Ended December 31, 2014
Total	Per Unit
Sales revenueFixed costsNet income / (Loss)Variable expensesContribution margin	$	$
Net income / (Loss)Fixed costsSales revenueVariable expensesContribution margin
Variable expensesFixed costsContribution marginNet income / (Loss)Sales revenue		$
Contribution marginSales revenueFixed costsVariable expensesNet income / (Loss)
Fixed costsVariable expensesNet income / (Loss)Contribution marginSales revenue	$