Hall Company had sales in 2014 of $1,722,600 on 63,800 units. Variable costs tot
ID: 2418290 • Letter: H
Question
Hall Company had sales in 2014 of $1,722,600 on 63,800 units. Variable costs totaled $765,600, and fixed costs totaled $406,100.
A new raw material is available that will decrease the variable costs per unit by 27% (or $3.24). However, to process the new raw material, fixed operating costs will increase by $155,300. 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 2014, 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.)
HALL COMPANY
CVP Income Statement
For the Year Ended December 31, 2014
(b) Prepare a projected CVP income statement for 2014, 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.)
HALLCOMPANY
CVP Income Statement
For the Year Ended December 31, 2014
HALL COMPANY
CVP Income Statement
For the Year Ended December 31, 2014
$
$
Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable Costs Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable Costs$
Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable Costs Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsNet Income/(Loss)SalesSelling ExpensesTotal Fixed ExpensesTotal Variable ExpensesVariable Costs$
Explanation / Answer
Answer a HALL COMPANY projected CVP Income Statement For the Year Ended December 31, 2014 Particulars Total Per Unit In $ In $ Sales 17,22,600.00 27 Less : Variable cost 7,65,600.00 12 Contribution 9,57,000.00 15 Less : Fixed cost 4,06,100.00 Net Income 5,50,900.00 Answer b HALL COMPANY projected CVP Income Statement For the Year Ended December 31, 2014 Particulars Total Per Unit In $ In $ Sales 17,00,206.20 25.38 Less : Variable cost 5,86,832.40 8.76 Contribution 11,13,373.80 16.62 Less : Fixed cost 5,61,400.00 Net Income 5,51,973.80 Increse in no.of units sold = 63800 * 5% = 3190 Total units to be sold = 3190 +63800 = 66990
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.