Question
Sunland Company had sales in 2022 of $1,734,200 on 59,800 units. Variable costs totalled $717,600, and fixed costs totalled $854,500. A new raw material
Sunland Company had sales in 2022 of $1,734,200 on 59,800 units. Variable costs totalled $717,600, and fixed costs totalled $854,500. 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 $45,700. Management feel 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 10% increase in the number of units sold. Prepare a CVP income statement for 2022: (Round per unit cost to 2 decimal places, e.g. 15.25.) (a) Assuming the changes have not been made: SUNLAND COMPANY CVP Income Statement (Unchanged) $ Total LA $ 69 $ (b) Assuming that changes are made as described. SUNLAND COMPANY CVP Income Statement (with changes) $ Total $ $ Per Unit Per Unit
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