Wicked Mikes Manufacturing has a factory that produces kitchen cabinets. The company has other product lines. Materials and labor for the cabinets are determined by each job. To simplify the assignment, we will assume the following average costs. The following information highlights Wicked Mikes cost structure for 2021.

• The materials include $6,500 for the wood and other materials on a per job basis.

• It requires 45 hours of labor on average for the cabinetry. The hourly rate is $12.

• The sales price will be set at a markup of 65%.

• The company estimates that it will have 90,000 direct labor hours in total for the cabinets.

• It assumes 2000 units are sold on average per year.

  A breakdown of estimated yearly costs for the 2000 units follows:

Salaries - office & administrative	$650,000
salaries for factory supervisor, janitor and security	$400,000
office rent	$350,000
factory rent	$100,000
office utilities and misc. office expenses (based on units sold)	$45,000
sales travel (based on units sold)	$24,000
insurance - office	$60,000
depreciation - office equipment	$40,000
depreciation for factory equipment	$85,000
advertising	$220,000
sales commissions (based on units sold)	$450,000
factory property taxes	$16,000
maintenance for factory equipment	$80,000

1. Prepare a new CVP Income Statement that reflects the following proposed changes. The company is considering a new supplier and some additional factory costs to increase quality and production levels. The new supplier will reduce direct material costs by 5%. The fixed costs will increase costs by 48%. With the expected increase in quality, the company believes that it can support a 1% increase in sales price. The volume used should be 2000 units and maybe more volumes.