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Sheffield Company had sales in 2020 of $1,865,000 on 74,600 units. Variable costs totaled $1,119,000 and fixed costs totaled $473,000. A new raw material

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Sheffield Company had sales in 2020 of $1,865,000 on 74,600 units. Variable costs totaled $1,119,000 and fixed costs totaled $473,000. 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 $114,000. 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. (a1) Your answer is correct. Prepare a projected CVP income statement for 2020 assuming the changes have not been made. For the Year Ended December 31, 2020 Sales Variable Costs Contribution Margin : 0 1865000 1119000 746000

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