Crane Company had sales in 2021 of $1,230,000 on 60,000 units. Variable costs totaled $738,000, and...
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Crane Company had sales in 2021 of $1,230,000 on 60,000 units. Variable costs totaled $738,000, and fixed costs totaled $410,000. A new raw material is available that will decrease the unit variable costs by 20% (or $2.46). However, to process the new raw material, fixed operating costs will increase by $82,000. Management feels that one half of the decline in the unit variable costs should be passed on to customers in the form of a sales price reduction. The marketing department expects that this sales price reduction will result in a 5% increase in the number of units sold. (a) Prepare a projected CVP income statement for 2022, assuming the changes have not been made. (Round per unit cost to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 1,225.) CRANE COMPANY CVP Income Statement For the Year Ended December 31, 2022 Total Per Unit Sales 1230000 2$ 20.50 Variable Costs 738000 12.30 Contribution Margin $ 8.20 Fixed Costs 410000 Net Income/(Loss) 24 (b) Prepare a projected CVP income statement for 2022, 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.) CRANE COMPANY CVP Income Statement For the Year Ended December 31, 2022 Total Per Unit Sales 2$ 2$ Variable Costs Contribution Margin $ Fixed Costs Net Income/(Loss) 2$ Crane Company had sales in 2021 of $1,230,000 on 60,000 units. Variable costs totaled $738,000, and fixed costs totaled $410,000. A new raw material is available that will decrease the unit variable costs by 20% (or $2.46). However, to process the new raw material, fixed operating costs will increase by $82,000. Management feels that one half of the decline in the unit variable costs should be passed on to customers in the form of a sales price reduction. The marketing department expects that this sales price reduction will result in a 5% increase in the number of units sold. (a) Prepare a projected CVP income statement for 2022, assuming the changes have not been made. (Round per unit cost to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 1,225.) CRANE COMPANY CVP Income Statement For the Year Ended December 31, 2022 Total Per Unit Sales 1230000 2$ 20.50 Variable Costs 738000 12.30 Contribution Margin $ 8.20 Fixed Costs 410000 Net Income/(Loss) 24 (b) Prepare a projected CVP income statement for 2022, 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.) CRANE COMPANY CVP Income Statement For the Year Ended December 31, 2022 Total Per Unit Sales 2$ 2$ Variable Costs Contribution Margin $ Fixed Costs Net Income/(Loss) 2$
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Related Book For
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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