Reference no: EM132571546

Question - Volmar Company had sales in 2020 of $1,551,000 on 51,700 units. Variable costs totalled $620,400, and fixed costs totalled $767,600.

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 $46,400. 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.

Required - Prepare CVP income statement for 2020: (Round per unit cost to 2 decimal places, e.g. 15.25.)

(a) Assuming the changes have not been made:

(b) Assuming that changes are made as described.