Pharoah Company had sales in 2024 of $1,350,000 on 60,000 units. Variable costs totaled $810,000,...

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Accounting

Pharoah Company had sales in 2024 of $1,350,000 on 60,000 units. Variable costs totaled $810,000, and fixed costs totaled
$450,000.
A new raw material is available that will decrease the unit variable costs by 20%(or $2.70). However, to process the new raterial
fixed operating costs will increase by $90,000. 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 5% increase in the number of units sold.
(a) Prepare a projected CVP income statement for 2025, 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.)
PHAROAH COMPANY
CVP Income Statement
For the Year Ended December 31,2025
Total
$
Net Income/(Loss)
Per Unit
$
$
$
$
(b) Prepare a projected CVP income statement for 2025, assuming that changes are made as described. (Round per unit cost to 2 decimal
places, e.g.5.25 and all other answers to 0 decimal places, e.g.1,225.)
PHAROAH COMPANY
CVP Income Statement
Total
$
Per Unit
$
$
$
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