Chrome File Edit View History Bookmarks People Window Help 4)) 31% [, Sat 10:33

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Chrome File Edit View History Bookmarks People Window Help 4)) 31% [, Sat 10:33 PM a . (D //WileyPLUS CSecure https://edugen.wileyplus.com/edugen/student/mainfr.uni WlleyPLUS: MyWlleyPLUsI HelR IContact UsI Leg Out WileyPLUS Weygandt, Financial & Managerial Accounting, 2e Financial and Managerial Accounting (ACCTG 10 and 11) E+ MESSAGE MY INSTRUCTOR STANDARD VIEW PRINTER VERSION BACK NEXT Exercise 20-5 Carey Company had sales in 2016 of $1,609,400 on 61,900 units. Variable costs totaled $866,600, and fixed costs totaled $475,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $2.80). However, to process the new raw material, fixed operating costs will increase by $90,000. 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.) CAREY COMPANY CVP Income Statement Total Per Unit (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 O decimal places, e.g. 1,225.) CAREY COMPANY CVP Income Statement Total Per Unit

Explanation / Answer

Revised Units 61900 64995 (61900*105%) Total PU Sales 1609400 26.00 24.60 (26-(2.80*50%)) Less: VC 866600 14.00 11.20 (14*80%) CM 742800 12.00 13.40 Fixed Cost 475000 90000 Additional Cost NOI 267800 A CAREY COMPANY CVP Income Statement For Year 2017 Units 61900 Total Units Sales 1609400 26.00 Variable Cost 866600 14.00 Contribution Margin 7,42,800 12.00 Fixed Cost 475000 Net Operating Income 267800 B CAREY COMPANY CVP Income Statement For Year 2017 Units 64995 Total Units Sales 1598877 24.60 Variable Cost 727944 11.20 Contribution Margin 8,70,933 13.40 Fixed Cost 565000 Net Operating Income 305933

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