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Hall Company had sales in the year 2014 of $1,560,000 on 60,000 units. Variable costs totaled $720,000, and fixed costs totaled $500,000. The new raw material is available which will reduce the variable costs per unit by 25% (or $3.00). Though, to process the latest raw material, fixed operating costs will raise by $150,000. Management feels that one-half of the declines in the variable costs per unit must be passed on to customers in the form of a sales price reduction. The marketing department predicts that this sales price reduction will outcome in a 5% increase in the number of units sold.

Instructions:

Develop a projected CVP income statement for 2014:

a) Supposing the changes have not been made, and

b) Supposing that changes are made as given.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M919222

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