**Carla Vista Company Financial Scenario***Background:*Carla Vista Company had sales in 2021 of $1,770,000 on 60,000 units. Variable costs amounted to $1,062,000, and fixed costs totaled $590,000.A new raw material can reduce unit variable costs by 20% (or $3.54). However, utilizing this material will increase fixed operating costs by $118,000. Management intends to apply half of the decrease in variable unit costs as a sales price reduction. The marketing team anticipates this price reduction will result in a 5% increase in the number of units sold.---**Task (a):** Prepare a projected CVP (Cost-Volume-Profit) income statement for 2022, assuming no changes have been made. The statement should be calculated with rounded values as follows:- Per unit costs: Round to 2 decimal places (e.g., $5.25)- All other figures: Round to 0 decimal places (e.g., $1,225)**CVP Income Statement Structure:**- Total and Per Unit Columns- Include fields for: - Revenue - Variable Costs - Contribution Margin - Fixed Costs - Net Income---**Task (b):** Prepare a projected CVP income statement for 2022, assuming described changes are implemented. Use the same rounding conventions as in Task (a).**CVP Income Statement Structure:**- Total and Per Unit Columns- Include fields for: - Revenue - Variable Costs - Contribution Margin - Fixed Costs - Net Income*Note: No numerical values are provided in this overview, and placeholders are used in the template for calculation completion.*

CVP income statement is the one which is prepared in the cost accounting system. It is prepared to…

Answered: Carla Vista Company had sales in 2021…

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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Currently, the unit selling price of a product is $350, the unit variable cost is $290, and the total fixed costs are $840,000. A proposal is being evaluated to increase the unit selling price to $390. a. Compute the current break-even sales (units). units b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant. units
For the coming year, Loudermilk Inc. anticipates fixed costs of $600,000, a unit variable cost of $75, and a unit selling price of $125. The maximum sales within the relevant range are $2,500,000. a. Determine the maximum possible operating loss.
Booth Company had sales in 2020 of $2,030,000 on 81,200 units. Variable costs totaled $1,218,000 and fixed costs totaled $485,000.A new raw material is available that will decrease the variable costs per unit by 20% (or $3.00). However, to process the new raw material, fixed operating costs will increase by $125,000. Management feels that two-thirds 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 4% increase in the number of units sold. Before Booth Company had the chance to implement usage of the new raw material, new industry specifications were announced and result in the following changes for the Booth Company. Variable costs will increase by 15% per unit and fixed costs will increase by $46,000. Management feels that a $3 per unit price increase is needed to accommodate the cost increases. However, this will result in a 10%…
Galla Incorporated needs to determine a price for a new product. Galla desires a 25% markup on the total cost of the product. Galla expects to sell 5,000 units. Additional information is as follows: Fixed Costs (total) Variable Costs per Unit Direct materials Direct labor $ 21 Overhead 22 General and administrative 20 26 Overhead General and administrative Using the total cost method what price should Galla charge? $ 45,000 18,000
Ore Company produces bookcases. Sales were good in 2019. However, with the slowdown in the economy, the Chief Financial Officer is concerned about the sales for 2020. The income statement for 2020 is as follows: Sales revenue $600,000 Less: Variable costs $360,000 Contribution margin $240,000 Less: Fixed costs $140,000 Net profit $100,000 The company expects to sell 60,000 units in 2020. Compare different types of cost behaviours to do the following: (a) Use cost-volume-profit analysis to determine the breakeven point in units and in dollars. (b) Use cost-volume-profit analysis to determine the margin of safety in units and in dollars. (c) Assuming that cost behaviour pattern remains unchanged, compute the decrease in net income if sales revenue dropped by $200,000 in 2020.
Whitewater Inc sells a product that has variable costs of $40 and a selling price of $95. Its current sales total $304,000 per month. Fixed manufacturing costs total $40,000 per month and fixed selling and administrative costs total $35,000 per month. The company is considering a proposal that will increase the selling price by 10%, increase the fixed manufacturing costs by 10%, and increase the fixed selling and administrative costs by $1,500. Part 1: Compute the company's current break-even point in units. Part 2: Compute the company's current income and the current margin of safety. Part 3: Compute the new contribution margin per unit assuming the proposal is accepted. Part 4: Compute the new break-even point in units assuming the proposal is accepted. Part 5: Compute the company's income assuming the proposal is accepted and sales total 3,300 units. Part 6: Should the proposal be accepted?
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Klinken Corporation's contribution margin ratio on the sale of its most popular product is 42%. The product is priced at $100, annual fixed expenses are $900,000. Management is evaluating two options: (1) lowering variable costs by 15% and (2) reducing fixed expenses by 15%. Required: Calculate the current level of break-even sales in dollars, as well as the break-even sales for the two options. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Break-even sales in dollars Option 1: Break-even sales in dollars Option 2: Break-even sales in dollars
Interchange Inc. had sales of $400,000, based on a unit selling price of $200. The variable cost per unit was $175, and fixed costs were $75,000. The maximum sales within Interchange Inc.’s relevant range are 2,750 units. Interchange Inc. is considering a proposal to spend an additional $32,750 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity.a. Construct a cost-volume-profit chart indicating the break-even sales for last year. Verify your answer, using the break-even equation. b. Using the cost-volume-profit chart prepared in part (1), determine (A) the income from operations for last year and (B) the maximum income from operations that could have been realized during the year. Verify your answers using the mathematical approach to cost-volume-profit analysis. c. Construct a cost-volume-profit chart indicating the break-even sales for the current year, assuming that a noncancellable contract is signed for the additional…
Valero Company had sales in 2016 of $1,800,000 on 60,000 units. Variable costs totaled $720,000, and fixed costs totaled $570,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $2.40). However, to process the new raw material, fixed operating costs will increase by $50,000. 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 depart ment expects that this sales price reduction will result in a 10% increase in the number of units sold. Instructions a) Prepare a CVP income statement for 2017, assuming the changes are made as described.
Bridgeport sells its product for $82 per unit. During 2025, it produced 120400 units and sold 105100 units. Costs per unit are: direct materials $25, direct labor $9, variable overhead $4, and variable operating expenses $2. Fixed costs are $722400 manufacturing overhead, and $77500 operating expenses. Assuming no variances were reported, no beginning inventory exists, and the company uses absorption costing, what will be reported as operating income? O $3211200. ○ $3706100. O $3421400. O $3601000. i

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