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Question 6 of 9 - / 1 Booth Company had sales in 2020 of $2,030,000 on 81.200 units. Variable costs totaled $1.218,000 and fixed costs totaled $485.000 A new raw material is available that will decrease the variable costs per unit by 20% (or $3.00). However, to process the new raw material, fixed operating costs will increase by $125,000. Management feels that two-thirds 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 4% increase in the number of units sold. Prepare a projected CVP income statement for 2020 assuming the changes have not been made. Booth Company CVP Income Statement For the Year Ended December 31, 2020 $ Administrative Expenses Contribution Margin Cost of Goods Sold Fixed Costs Gross Profit Net Income/(Loss) Sales Selling Expenses Total Fixed Expenses Total Variable Expenses Variable Costs MacBook Pro DU 80 F3 80 F A # & $ 4 2 3 5 6 7 8 9 9 W R E T Y U S D F G H J K L Question 6 of 9 Prepare a projected CVP income statement for 2020 assuming that changes are made as described. Booth Company CVP Income Statement For the Year Ended December 31, 2020 Add Less $ Before Booth Company had the chance to implement usage of the new raw material, new industry specifications were announced and result in the following changes for the Booth Company. Variable costs will increase by 15% per unit and fixe costs will increase by $46,000. Management feels that a $3 per unit price increase is needed to accommodate the cost increases. However, this will result in a 10% decrease in units sold. Prepare a CVP income statement assuming these change have been made Booth Company CVP Income Statement MacBook Pro 80 000 DOO F4 D FE 510 & F5 57 3 F2 A # $ & % 5 6 7 9 8 2 3 4 0 14 E R 0 T Y U ation.wiley.com/was/l/2/assessment-player/index.html?launchid-bcdfed3-291a-445f-bdbc-9c7843677108/question/5 e/Profit Question 6 of 9 -11 Before Booth Company had the chance to implement usage of the new raw material, new industry specifications were announced and result in the following changes for the Booth Company. Variable costs will increase by 15% per unit and fixed costs will increase by $46,000. Management feels that a $3 per unit price increase is needed to accommodate the cost increases. However, this will result in a 10% decrease in units sold. Prepare a CVP income statement assuming these changes have been made Booth Company CVP Income Statement For the Year Ended December 31, 2020 The marketing department suggests implementing an advertising promotion that would increase variable costs by 50.50 per unit but would retain the original sales volume of 81.200 units. Prepare a CPV income statement with these changes. Use the information in part (b) to complete this section. MacBook Pro 80 DII FB 59 F5 F2 F4 % $ 4 & 7 3 5 6 8 9 W ERT Y U 0 me/Profit Question 6 of 9 -/1 The marketing department suggests implementing an advertising promotion that would increase variable costs by $0.50 per unit but would retain the original sales volume of 81.200 units. Prepare a CPV income statement with these changes. Use the information in part (b) to complete this section Booth Company CVP Income Statement For the Year Ended December 31, 2020 Do you recommend implementation of the advertising program? Why or why not? The implementation of the advertising program is as the net income would Increase decrease not change MacBook Pro SO Di DO DOC F& FS @ # $ % 5 & 7 3 2 4 6 8 9 0 W E R T Y U 0 S D F G H Question 6 of 9 > -/1 The marketing department suggests implementing an advertising promotion that would increase variable costs by $0.50 per unit but would retain the original sales volume of 81.200 units. Prepare a CPV income statement with these changes. Use the information in part (b) to complete this section Booth Company CVP Income Statement For the Year Ended December 31, 2020 Do you recommend implementation of the advertising program? Why or why not? The implementation of the advertising programi as the net income would recommended not recommended MacBook Pro Din 20 F3 090 F 75 6 57 *2 # $ % & 7 ) 0 2 3 4 5 6 8 9 W E R T Y Y U OP S D F (D H J K . Question 6 of 9 - / 1 Booth Company had sales in 2020 of $2,030,000 on 81.200 units. Variable costs totaled $1.218,000 and fixed costs totaled $485.000 A new raw material is available that will decrease the variable costs per unit by 20% (or $3.00). However, to process the new raw material, fixed operating costs will increase by $125,000. Management feels that two-thirds 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 4% increase in the number of units sold. Prepare a projected CVP income statement for 2020 assuming the changes have not been made. Booth Company CVP Income Statement For the Year Ended December 31, 2020 $ Administrative Expenses Contribution Margin Cost of Goods Sold Fixed Costs Gross Profit Net Income/(Loss) Sales Selling Expenses Total Fixed Expenses Total Variable Expenses Variable Costs MacBook Pro DU 80 F3 80 F A # & $ 4 2 3 5 6 7 8 9 9 W R E T Y U S D F G H J K L Question 6 of 9 Prepare a projected CVP income statement for 2020 assuming that changes are made as described. Booth Company CVP Income Statement For the Year Ended December 31, 2020 Add Less $ Before Booth Company had the chance to implement usage of the new raw material, new industry specifications were announced and result in the following changes for the Booth Company. Variable costs will increase by 15% per unit and fixe costs will increase by $46,000. Management feels that a $3 per unit price increase is needed to accommodate the cost increases. However, this will result in a 10% decrease in units sold. Prepare a CVP income statement assuming these change have been made Booth Company CVP Income Statement MacBook Pro 80 000 DOO F4 D FE 510 & F5 57 3 F2 A # $ & % 5 6 7 9 8 2 3 4 0 14 E R 0 T Y U ation.wiley.com/was/l/2/assessment-player/index.html?launchid-bcdfed3-291a-445f-bdbc-9c7843677108/question/5 e/Profit Question 6 of 9 -11 Before Booth Company had the chance to implement usage of the new raw material, new industry specifications were announced and result in the following changes for the Booth Company. Variable costs will increase by 15% per unit and fixed costs will increase by $46,000. Management feels that a $3 per unit price increase is needed to accommodate the cost increases. However, this will result in a 10% decrease in units sold. Prepare a CVP income statement assuming these changes have been made Booth Company CVP Income Statement For the Year Ended December 31, 2020 The marketing department suggests implementing an advertising promotion that would increase variable costs by 50.50 per unit but would retain the original sales volume of 81.200 units. Prepare a CPV income statement with these changes. Use the information in part (b) to complete this section. MacBook Pro 80 DII FB 59 F5 F2 F4 % $ 4 & 7 3 5 6 8 9 W ERT Y U 0 me/Profit Question 6 of 9 -/1 The marketing department suggests implementing an advertising promotion that would increase variable costs by $0.50 per unit but would retain the original sales volume of 81.200 units. Prepare a CPV income statement with these changes. Use the information in part (b) to complete this section Booth Company CVP Income Statement For the Year Ended December 31, 2020 Do you recommend implementation of the advertising program? Why or why not? The implementation of the advertising program is as the net income would Increase decrease not change MacBook Pro SO Di DO DOC F& FS @ # $ % 5 & 7 3 2 4 6 8 9 0 W E R T Y U 0 S D F G H Question 6 of 9 > -/1 The marketing department suggests implementing an advertising promotion that would increase variable costs by $0.50 per unit but would retain the original sales volume of 81.200 units. Prepare a CPV income statement with these changes. Use the information in part (b) to complete this section Booth Company CVP Income Statement For the Year Ended December 31, 2020 Do you recommend implementation of the advertising program? Why or why not? The implementation of the advertising programi as the net income would recommended not recommended MacBook Pro Din 20 F3 090 F 75 6 57 *2 # $ % & 7 ) 0 2 3 4 5 6 8 9 W E R T Y Y U OP S D F (D H J K
