Blossom Company had sales in 2022 of $1,493.100 on 55,300 units. Variable costs totalled $608,300, and fixed costs totalled $745,400. A new raw material is available that will decrease the variable costs per unit by 20% (or $2.20). However, to process the new raw material, fixed operating costs will increase by $50,000. 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, eg. 15.25.) (a) Assuming the changes have not been made: (a) Assuming the changes have not been made: BLOSSOM COMPANY CVP Income Statement (Unchanged) Total Per Unit (b) Assuming that changes are made as described. BLOSSOM COMPANY CVP Income Statement (with changes) Total Per Unit
Blossom Company had sales in 2022 of $1,493.100 on 55,300 units. Variable costs totalled $608,300, and fixed costs totalled $745,400. A new raw material is available that will decrease the variable costs per unit by 20% (or $2.20). However, to process the new raw material, fixed operating costs will increase by $50,000. 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, eg. 15.25.) (a) Assuming the changes have not been made: (a) Assuming the changes have not been made: BLOSSOM COMPANY CVP Income Statement (Unchanged) Total Per Unit (b) Assuming that changes are made as described. BLOSSOM COMPANY CVP Income Statement (with changes) Total Per Unit
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 40P
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