Reference no: EM13841237

Problem 1: CVP analysis:

SND, Inc., had the following result for last year:

	Total	Per unit
Sales revenue	$2,000,000	$20.00
Variable expenses	1,250,000	12.50
Contribution margin1	75,000	$7.50
Fixed expenses	400,000
Operating income	$350,000

Prepare a new income statement for each of the following scenarios. Consider each scenario independently.

Required:

a. Sales volume decreases by 10%.

b. The sales price increases by 5%.

c. Variable costs per unit increase by $1.50.

d. The sales price decreases to $18, and an additional 5,000 units are sold.

e. A new advertising campaign costing $75,000 increases sales volume by 15%.

f. Variable costs per unit increase by $2.00, the sales price per unit increases by $1.50, sales volume decreases by 2,500 units, and fixed expenses increase by $20,000.