Carey Company had sales in 2016 of $ 1,684,800 on 62,400 units. Variable costs totaled $ 1,123,200, and fixed costs totaled $ 513,000.

A new raw material is available that will decrease the variable costs per unit by 20% (or $ 3.60). However, to process the new raw material. fixed operating costs will increase by $ 92,000. Management feels 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 5% increase in the number of units sold.

(a) Prepare a projected CVP income statement for 2017. assuming the changes have not been made. (Round per unit cost to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 1,225.)

(b) Prepare a projected CVP income statement for 2017. assuming that changes are made as described. (Round per unit cost to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 1,225.)

Transcribed Image Text:

CAREY COMPANY CVP Income Statement $ Total $ $ Per Unit CAREY COMPANY CVP Income Statement Total Per Unit CAREY COMPANY CVP Income Statement $ Total $ $ Per Unit CAREY COMPANY CVP Income Statement Total Per Unit

Answer rating: 100% (QA)

Requirement a Assuming changes have not been made Carey Compa... View the full answer