Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. swifty company had sales in 2020 of $2,030,000 on

Swifty Company had sales in 2020 of $2,030,000 on 81,200 units. Variable costs totaled $1,218,000...

90.2K

Verified Solution

Question

Accounting

imageimage Swifty Company had sales in 2020 of $2,030,000 on 81,200 units. Variable costs totaled $1,218,000 and fixed costs totaled $485,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $3.00 ). However, to process the new raw material, fixed operating costs will increase by $125,000. Management feels that two-thirds 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 4% increase in the number of units sold. Before Swifty Company had the chance to implement usage of the new raw material, new industry specifications were announce and result in the following changes for the Swifty Company. Variable costs will increase by 15% per unit and fixed costs will increase by $46,000. Management feels that a $3 per unit price increase is needed to accommodate the cost increases. Howevel this will result in a 10% decrease in units sold. Prepare a CVP income statement assuming these changes have been made

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students