Carey Company had sales in 2024 of $1,500,000 on 60,000 units. Variable costs totaled $900,000, and fixed

Question:

Carey Company had sales in 2024 of $1,500,000 on 60,000 units. Variable costs totaled $900,000, and fixed costs totaled $500,000.
A new raw material is available that will decrease the unit variable costs by 20% (or $3). However, to process the new raw material, fixed operating costs will increase by $100,000. Management feels that onehalf of the decline in the unit variable costs 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 5% increase in the number of units sold.


Instructions
Prepare a projected CVP income statement for 2025 

(a) Assuming the changes have not been made

(b) Assuming that changes are made as described.

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Accounting Tools For Business Decision Making

ISBN: 9781119791058

8th Edition

Authors: Paul D. Kimmel,  Jerry J. Weygandt,  Jill E. Mitchell

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