E6.5 (LO 1), AP Carey Company had sales in 2021 of $1,500,000 on 60,000 units. Variable costs totaled $900,000, and fixed coststotaled $500,000.A new raw material is available that will decrease the unit variable costs by 20% (or $3). However, to process the new raw material, fixedoperating costs will increase by $100,000. Management feels that one-half of the decline in the unit variable costs should be passed on tocustomers 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.InstructionsPrepare a projected CVP income statement for 2022 (a) assuming the changes have not been made, and (b) assuming that changes aremade as described.Compute break-even point in sales units for a company with more than one product.

CVP analysis : It is the analysis of three different factors such as cost,volume and profit.These…

Answered: E6.5 (LO 1), AP Carey Company had sales…

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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Lusk Corporation produces and sells 14,300 units of Product X each month. The selling price of Product X is $25 per unit, and variable expenses are $19 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $72,000 of the $102,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the monthly financial advantage (disadvantage) for the company
A company has set its initial selling price at $28 per unit. Its variable manufacturing costs are $10 per unit produced. Its variable selling and administrative costs are $2 per unit sold. The company’s fixed manufacturing costs are $300,000 per period and its fixed selling and administrative costs are $150,000 per period. The company’s target profit is $200,000 per period. What is the breakeven point in units? What is the breakeven point in dollars? How many units must be sold to achieve the target profit? If the fixed costs increase by 20%, how many units must be sold to achieve the target profit?
Last year Minden Company introduced a new product and sold 25, 300 units of it at aprice of $99 per unit. The product's variable expenses are $69 per unit and its fixedexpenses are $837,300 per year. Required: 1. What was this product's net operatingincome (loss) last year? 2. What is the product's break - even point in unit sales anddollar sales? 3. Assume the company has conducted a marketing study that estimates itcan increase annual sales of this product by 5.000 units for each $2 reduction in itsselling price. If the company will only consider price reductions in increments of $2 (e.g$68, $66, etc.), what is the maximum annual profit that it can earn on this product?What sales volume and selling price per unit generate the maximum profit? 4. Whatwould be the break - even point in unit sales and in dollar sales using the selling pricethat you determined in requirement 3?
Booth Company had sales in 2020 of $1,875,000 on 75,000 units. Variable costs totaled $1,125,000 and fixed costs totaled $500,000.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. Prepare a projected CVP income statement for 2020 assuming the changes have not been made. If you can solve this I would appreciate it.
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Gibson Modems has excess production capacity and is considering the possibility of making and selling paging equipment. The following estimates are based on a production and sales volume of 1,800 pagers.Unit-level manufacturing costs are expected to be $28. Sales commissions will be established at $1.80 per unit. The current facility-level costs, including depreciation on manufacturing equipment ($68,000), rent on the manufacturing facility ($58,000), depreciation on the administrative equipment ($14,400), and other fixed administrative expenses ($75,950), will not be affected by the production of the pagers. The chief accountant has decided to allocate the facility-level costs to the existing product (modems) and to the new product (pagers) on the basis of the number of units of product made (i.e., 5,800 modems and 1,800 pagers).Requireda. Determine the per-unit cost of making and selling 1,800 pagers. (Do not round intermediate calculations. Round your answer to 3 decimal places.)
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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.
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[The following information applies to the questions displayed below.] Astro Co. sold 19,200 units of its only product and incurred a $43,072 loss (ignoring taxes) for the current year, as shown here. During a planning session for year 2020's activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $142,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2019 $704,640 563,712 Sales Variable costs Contribution margin Fixed costs 140,928 184,000 Net loss $(43,072) Compute the sales level required in both dollars and units to earn $120,000 of target pretax income in 2020 with the machine stalled and no change in unit sales price. (Do not round intermediate calculations. Round your answers to 2 decimal places. pund "Contribution margin…

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