Prepare a cvp income statement

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Reference no: EM132083200

Question: Volmar Company had sales in 2016 of $1, 250,000 on 50,000 units. Variable costs totalled $600,000, and fixed costs totalled $500,000. 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 feel 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 department expects that this sales price reduction will result in a 10% increase in the number of units sold.

Prepare a CVP income statement for 2016,

(a) assuming the changes have not been made, and

(b) assuming that changes are made as described.

Reference no: EM132083200

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