Help4a

5a

Required information [The following information applies to the questions displayed below] Burchard Company sold 40000 units of its only product for $25 per unit this year. Manufacturing and selling the product required $525,000 of fixed costs. Its per unit variable costs follow. For the next yeas, management will use a new material, which will reduce direct materials costs to $4.50 per unit and reduce direct labon costs to $2 per unit Sales, total fixed costs, variable overhead costs per unit, and variable selling and administrative costs per unit wil not change Management is also considering raising its selling price to $30 per unit. which would decrease unit sales volume to 36,000 units. Required: 1. Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing the selling price. Note: Round "per unit answers" to 2 decimal places. 2. Prepare a contribution margin income statement for next year with two columns showing the expected results of (a) using the new material and (b) using the new material and increasing the selling price