Required Information Problem 5-5A (Algo) Contribution margin; income effects of alternative strategies LO C2, A1, P2 The following information applies to the questions displayed below] Burchard Company sold 25,000 units of its only product for $20.00 per unit this year. Manufacturing and selling the product required $280,000 of fixed costs. Its per unit variable costs follow. Direct materials Direct labor Variable overhead costs Variable selling and administrative costs $ 3.00 2.00 0.38 0.10 For the next year, management will use a new material, which will reduce direct materials costs to $1.50 per unit and reduce direct labor costs to $1.00 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling and administrative costs per unit will not change. Management is also considering raising its selling price to $24.00 per unit, which would decrease unit sales volume to 23,750 units. Problem 5-5A (Algo) Part 2 2. Prepare a contribution margin income statement for next year with two columns showing the expected results of (a) using the material and (b) using the new material and increasing the selling price. Answer is not complete. BURCHARD COMPANY Contribution Margin Income Statement With new With new material material and price increase Number of units: 25.000 23,750 Sales S 500,000 $ 570,000 Variable costs (75.000) (35,625) Contribution margin 425,000 534,375 Fixed costs Income S 425,000 S 534,375