Cleveland's managers have determined that the following changes will impact their current contribution margin income statement (shown above) 1. Variable costs per unit will increase by 20% beginning next month. 2. To offset this increase in costs, they are considering a 12% increase in the sales price per unit. 3. Market research indicates that the price increase will result in a 2% decrease in the number of learning systems Cleveland sells. Using the information provided above, show how the three changes will impact the company by completing the revised Contribution Margin Income Statement.
Cleveland's managers have determined that the following changes will impact their current contribution margin income statement (shown above) 1. Variable costs per unit will increase by 20% beginning next month. 2. To offset this increase in costs, they are considering a 12% increase in the sales price per unit. 3. Market research indicates that the price increase will result in a 2% decrease in the number of learning systems Cleveland sells. Using the information provided above, show how the three changes will impact the company by completing the revised Contribution Margin Income Statement.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![PART B: "WHAT IF" CVP ANALYSIS
DESCRIPTION
Sales Revenue (Sold 14,000 Units)
Variable Expenses
Contribution Margin
Fixed Expenses
Operating Income
TOTAL
$700,000
$315,000
$385,000
Cleveland's managers have determined that the following changes will impact their current contribution margin income
statement (shown above)
DESCRIPTION
$250,250
$134,750
1. Variable costs per unit will increase by 20% beginning next month.
2. To offset this increase in costs, they are considering a 12% increase in the sales price per unit.
3.
Market research indicates that the price increase will result in a 2% decrease in the number of learning systems
Cleveland sells.
SALES
REVENUE
Using the information provided above, show how the three changes will impact the company by completing the
revised Contribution Margin Income Statement.
VARIABLE
COSTS
PER UNIT
$50
$22.50
$27.50
SHOW YOUR WORK
AMOUNT](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F503bef97-0a89-4e34-8b8c-b76f4dabcdee%2F2f9ddcff-55d6-4efd-a42d-578c73ccd199%2F3pevuun_processed.png&w=3840&q=75)
Transcribed Image Text:PART B: "WHAT IF" CVP ANALYSIS
DESCRIPTION
Sales Revenue (Sold 14,000 Units)
Variable Expenses
Contribution Margin
Fixed Expenses
Operating Income
TOTAL
$700,000
$315,000
$385,000
Cleveland's managers have determined that the following changes will impact their current contribution margin income
statement (shown above)
DESCRIPTION
$250,250
$134,750
1. Variable costs per unit will increase by 20% beginning next month.
2. To offset this increase in costs, they are considering a 12% increase in the sales price per unit.
3.
Market research indicates that the price increase will result in a 2% decrease in the number of learning systems
Cleveland sells.
SALES
REVENUE
Using the information provided above, show how the three changes will impact the company by completing the
revised Contribution Margin Income Statement.
VARIABLE
COSTS
PER UNIT
$50
$22.50
$27.50
SHOW YOUR WORK
AMOUNT
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