BA225 Managerial Accounting: E6-5 Hall Company had sales in 2011

BA225 Managerial Accounting
E6-5 Hall Company had sales in 2011 of $1,500,000 on 60,000 units. Variable cost totaled $720,000, and fixed cost totaled $400,000. A raw material is available that will decrease the variable costs per unit by 25% (or $3.00). However, to process the new raw material, fixed operating costs will increase by $150,000. Management feels that one-half of declines in the variable cost per unit should be passed on to customers in the form of sales price reduction. The marketing department expects that this sales price reduction will result in 5% increase in number units sold.

Prepare a projected CVP income statement of 2014 (a) assuming the changes have not been made, and (b) assuming that changes are made as described.
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