Marketing department expects that this sales price reduction

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Hall Company had sales in 2014 of $1,812,500 on 62,500 units. Variable costs totaled $875,000, and fixed costs totaled $402,600.

A new raw material is available that will decrease the variable costs per unit by 29% (or $4.06). However, to process the new raw material, fixed operating costs will increase by $157,700. Management feels that one-half of the declines 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 5% increase in the number of units sold.

Prepare a projected CVP income statement for 2014, assuming the changes have not been made. (Round per unit cost to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 1,225.)

Reference no: EM13775382

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