Answer:
a. CVP income statement for 2020 [ assuming no changes]
Sales $1,703,700
Less Variable Cost ($883,400)
Contribution $820,300
Less Fixed Costs ($549,000)
Net Income/ (Loss) $271,300
a. CVP income statement for 2020 [ assuming changes are made]
Sales (($1,703,700/ 63,100 - $1.40 ) × (63,100 + 5%)) $1,696,128
Less Variable Cost (($883,400/63,100 - $2.80) × (63,100 + 5%)) ($742,056)
Contribution $954,072
Less Fixed Costs ($549,000 +$90,000) ($639,000)
Net Income/ (Loss) $315,072
Explanation:
Adjusting the CVP income statement requires you to first find the current unit selling prices and variable costs. This is done by dividing the Total Sales and Total Variable Costs with the number of units currently sold.
Once you have these apply the changes respectively and remember to increase the number of units as well for the final answer in the line items. Follow carefully the calculations i have done.
