Exercise 22-15_Hall Company_CVP Analysis

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Exercise 22-15

 

Hall Company had sales in 2014 of $1,505,520 on 62,730 units. Variable costs totaled $690,030, and fixed costs totaled $638,890.

A new raw material is available that will decrease the variable costs per unit by 21% (or $2.31). However, to process the new raw material, fixed operating costs will increase by $61,710. Management feels 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 7% increase in the number of units sold.

 

Prepare a CVP income statement for 2014, assuming the changes have not been made

 

Prepare a CVP income statement for 2014, assuming the changes are made as described.

 

 

    • 8 years ago
    Exercise 22-15_Hall Company_CVP Analysis
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