Carey Company had sales in 2016 of $1560000 on 60000 units

Carey Company had sales in 2016 of $1560000 on 60000 units. Variable costs totaled $900000 and fixed costs totaled $500000. A new raw material is available that will decrease the variable costs per unit by 20% (or $3). However to process the new material fixed operating costs will increase by $100000. 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 5% increase in the number of units sold. Instructions: Prepare a projected CVP income statement for 2017 (a) assuming the changes have not been made and (b) assuming that changes are made as described.

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