1 answer

Ent CALCULATOR FULL SCREEN PRINTER VERSTON BACK NEX Exercise 19-05 Your answer is partially correct. Try...

Question:

ent CALCULATOR FULL SCREEN PRINTER VERSTON BACK NEX Exercise 19-05 Your answer is partially correct. Try again. Carey Company
ignment CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT (b) Prepare a projected CVP Income statement for 2020, assuming that
ent CALCULATOR FULL SCREEN PRINTER VERSTON BACK NEX Exercise 19-05 Your answer is partially correct. Try again. Carey Company had sales in 2019 of $1,766,800 on 63,100 units. Variable costs totaled $1,009,600, and fixed costs totaled $499,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $3.20). However, to process the new raw material, fixed operating costs will increase by $98,000. 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 2020, assuming the changes have not been made. CAREY COMPANY CVP Income Statement For the Year Ended December 31, 2020 Total Per Unit T Sales 1 Variable Costs Contribution Margin . Fixed Costs Net Income/(Loss)
ignment CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT (b) Prepare a projected CVP Income statement for 2020, assuming that changes are made as described. (Round per unit cost to 2 decimal places, e.. 5.25 and all other answers to decimal places, e.g. 1.225.) CAREY COMPANY CVP Income Statement For the Year Ended December 31, 2020 Per Unit Sales T Variable Costs NIIII Contribution Margin Foxed Costs Net Income/(Loss) 0 Click if you would like to show Work for this question: Open Show Work

Answers

For answer (b)

New variable cost per unit = $16-3.20 =$12.80

New selling price per unit = $28-(3.20*1/2) = $26.40

New fixed cost = $499000+98000 = $597000

New sold units = 63100+5% of 63900 = 66255 units

Answer (a) CAREY COMPANY
CVP Statement
For the year Ended December 31, 2020
Total Per Unit
Sales $        1,766,800 $     28.00
Variable Cost $        1,009,600 $     16.00
Contribution $            757,200 $     12.00
Fixed Cost $            499,000
Net income (loss) $            258,200
Answer (b) CAREY COMPANY
CVP Statement
For the year Ended December 31, 2020
Total Per Unit
Sales $        1,749,132 $     26.40
Variable Cost $            848,064 $     12.80
Contribution $            901,068 $     13.60
Fixed Cost $            597,000
Net income (loss) $            304,068
.

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