Carey Company had sales in 2019 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 2020, assuming the changes have not been made. CAREY COMPANY CVP Income Statement December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020 Total Per Unit Net Income/(Loss)Gross ProfitSalesSelling ExpensesContribution MarginTotal Variable ExpensesFixed CostsAdministrative ExpensesTotal Fixed ExpensesVariable CostsCost of Goods Sold SalesGross ProfitNet Income/(Loss)Administrative ExpensesTotal Variable ExpensesSelling ExpensesVariable CostsTotal Fixed ExpensesContribution MarginCost of Goods SoldFixed Costs Total Fixed ExpensesSalesFixed CostsGross ProfitTotal Variable ExpensesAdministrative ExpensesNet Income/(Loss)Selling ExpensesContribution MarginVariable CostsCost of Goods Sold Administrative ExpensesSalesFixed CostsTotal Fixed ExpensesTotal Variable ExpensesContribution MarginGross ProfitVariable CostsCost of Goods SoldSelling ExpensesNet Income/(Loss) Total Fixed ExpensesNet Income/(Loss)SalesCost of Goods SoldSelling ExpensesTotal Variable ExpensesVariable CostsGross ProfitAdministrative ExpensesContribution MarginFixed Costs (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.g. 5.25 and all other answers to 0 decimal places, e.g. 1,225.) CAREY COMPANY CVP Income Statement For the Quarter Ended December 31, 2020December 31, 2020For the Year Ended December 31, 2020 Total Per Unit Administrative ExpensesGross ProfitTotal Fixed ExpensesFixed CostsCost of Goods SoldTotal Variable ExpensesVariable CostsContribution MarginNet Income/(Loss)SalesSelling Expenses Gross ProfitAdministrative ExpensesContribution MarginCost of Goods SoldSelling ExpensesSalesTotal Fixed ExpensesTotal Variable ExpensesVariable CostsFixed CostsNet Income/(Loss) Total Variable ExpensesGross ProfitSalesAdministrative ExpensesFixed CostsSelling ExpensesVariable CostsContribution MarginCost of Goods SoldNet Income/(Loss)Total Fixed Expenses Cost of Goods SoldAdministrative ExpensesSelling ExpensesNet Income/(Loss)Gross ProfitContribution MarginFixed CostsSalesTotal Variable ExpensesTotal Fixed ExpensesVariable Costs Selling ExpensesNet Income/(Loss)Administrative ExpensesCost of Goods SoldGross ProfitTotal Variable ExpensesSalesTotal Fixed ExpensesVariable CostsContribution MarginFixed Costs

Carey Company had sales in 2019 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 2020, assuming the changes have not been made. CAREY COMPANY CVP Income Statement December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020 Total Per Unit Net Income/(Loss)Gross ProfitSalesSelling ExpensesContribution MarginTotal Variable ExpensesFixed CostsAdministrative ExpensesTotal Fixed ExpensesVariable CostsCost of Goods Sold SalesGross ProfitNet Income/(Loss)Administrative ExpensesTotal Variable ExpensesSelling ExpensesVariable CostsTotal Fixed ExpensesContribution MarginCost of Goods SoldFixed Costs Total Fixed ExpensesSalesFixed CostsGross ProfitTotal Variable ExpensesAdministrative ExpensesNet Income/(Loss)Selling ExpensesContribution MarginVariable CostsCost of Goods Sold Administrative ExpensesSalesFixed CostsTotal Fixed ExpensesTotal Variable ExpensesContribution MarginGross ProfitVariable CostsCost of Goods SoldSelling ExpensesNet Income/(Loss) Total Fixed ExpensesNet Income/(Loss)SalesCost of Goods SoldSelling ExpensesTotal Variable ExpensesVariable CostsGross ProfitAdministrative ExpensesContribution MarginFixed Costs (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.g. 5.25 and all other answers to 0 decimal places, e.g. 1,225.) CAREY COMPANY CVP Income Statement For the Quarter Ended December 31, 2020December 31, 2020For the Year Ended December 31, 2020 Total Per Unit Administrative ExpensesGross ProfitTotal Fixed ExpensesFixed CostsCost of Goods SoldTotal Variable ExpensesVariable CostsContribution MarginNet Income/(Loss)SalesSelling Expenses Gross ProfitAdministrative ExpensesContribution MarginCost of Goods SoldSelling ExpensesSalesTotal Fixed ExpensesTotal Variable ExpensesVariable CostsFixed CostsNet Income/(Loss) Total Variable ExpensesGross ProfitSalesAdministrative ExpensesFixed CostsSelling ExpensesVariable CostsContribution MarginCost of Goods SoldNet Income/(Loss)Total Fixed Expenses Cost of Goods SoldAdministrative ExpensesSelling ExpensesNet Income/(Loss)Gross ProfitContribution MarginFixed CostsSalesTotal Variable ExpensesTotal Fixed ExpensesVariable Costs Selling ExpensesNet Income/(Loss)Administrative ExpensesCost of Goods SoldGross ProfitTotal Variable ExpensesSalesTotal Fixed ExpensesVariable CostsContribution MarginFixed Costs

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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CAREY COMPANY CVP Income Statement December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020
	Total	Per Unit
Net Income/(Loss)Gross ProfitSalesSelling ExpensesContribution MarginTotal Variable ExpensesFixed CostsAdministrative ExpensesTotal Fixed ExpensesVariable CostsCost of Goods Sold
SalesGross ProfitNet Income/(Loss)Administrative ExpensesTotal Variable ExpensesSelling ExpensesVariable CostsTotal Fixed ExpensesContribution MarginCost of Goods SoldFixed Costs
Total Fixed ExpensesSalesFixed CostsGross ProfitTotal Variable ExpensesAdministrative ExpensesNet Income/(Loss)Selling ExpensesContribution MarginVariable CostsCost of Goods Sold
Administrative ExpensesSalesFixed CostsTotal Fixed ExpensesTotal Variable ExpensesContribution MarginGross ProfitVariable CostsCost of Goods SoldSelling ExpensesNet Income/(Loss)
Total Fixed ExpensesNet Income/(Loss)SalesCost of Goods SoldSelling ExpensesTotal Variable ExpensesVariable CostsGross ProfitAdministrative ExpensesContribution MarginFixed Costs

(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.g. 5.25 and all other answers to 0 decimal places, e.g. 1,225.)

CAREY COMPANY CVP Income Statement For the Quarter Ended December 31, 2020December 31, 2020For the Year Ended December 31, 2020
	Total	Per Unit
Administrative ExpensesGross ProfitTotal Fixed ExpensesFixed CostsCost of Goods SoldTotal Variable ExpensesVariable CostsContribution MarginNet Income/(Loss)SalesSelling Expenses
Gross ProfitAdministrative ExpensesContribution MarginCost of Goods SoldSelling ExpensesSalesTotal Fixed ExpensesTotal Variable ExpensesVariable CostsFixed CostsNet Income/(Loss)
Total Variable ExpensesGross ProfitSalesAdministrative ExpensesFixed CostsSelling ExpensesVariable CostsContribution MarginCost of Goods SoldNet Income/(Loss)Total Fixed Expenses
Cost of Goods SoldAdministrative ExpensesSelling ExpensesNet Income/(Loss)Gross ProfitContribution MarginFixed CostsSalesTotal Variable ExpensesTotal Fixed ExpensesVariable Costs
Selling ExpensesNet Income/(Loss)Administrative ExpensesCost of Goods SoldGross ProfitTotal Variable ExpensesSalesTotal Fixed ExpensesVariable CostsContribution MarginFixed Costs

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