Pharoah Company had sales in of $ on units. Variable costs totaled $ and fixed costs totaled
$
A new raw material is available that will decrease the unit variable costs by or $ However, to process the new raterial
fixed operating costs will increase by $ Management feels that one half of the decline in the unit variable costs 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 increase in the number of units sold.
a Prepare a projected CVP income statement for assuming the changes have not been made. Round per unit cost to decimal
places, eg and all other answers to decimal places, eg
PHAROAH COMPANY
CVP Income Statement
For the Year Ended December
Total
$
Net IncomeLoss
Per Unit
$
$
$
$
b Prepare a projected CVP income statement for assuming that changes are made as described. Round per unit cost to decimal
places, eg and all other answers to decimal places, eg
PHAROAH COMPANY
CVP Income Statement
Total
$
Per Unit
$
$
$
