Sunland Company had sales in 2022 of $1,734,200 on 59,800 units. Variable costs totalled $717,600, and...
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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: Sales Variable costs Contribution margin Fixed costs Operating income SUNLAND COMPANY CVP Income Statement (Unchanged) For the Month Ended December 31, 2022 Total 1,734,200 717,600 1,016,600 854,500 162,100 पण GA Per Unit 29 12 17 (b) Assuming that changes are made as described. Sales Variable costs Contribution margin Fixed costs Operating income SUNLAND COMPANY CVP Income Statement (with changes) For the Month Ended December 31, 2022 $ $ Total $ V Per Unit 9.6 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: Sales Variable costs Contribution margin Fixed costs Operating income SUNLAND COMPANY CVP Income Statement (Unchanged) For the Month Ended December 31, 2022 Total 1,734,200 717,600 1,016,600 854,500 162,100 पण GA Per Unit 29 12 17 (b) Assuming that changes are made as described. Sales Variable costs Contribution margin Fixed costs Operating income SUNLAND COMPANY CVP Income Statement (with changes) For the Month Ended December 31, 2022 $ $ Total $ V Per Unit 9.6
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Related Book For
Managerial Accounting Tools for Business Decision Making
ISBN: 978-1119392422
8th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
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