Burchard Company sold 40,000 units of its only product for $25 per unit this year. Manufacturing and selling the productrequired $525,000 of fixed costs. Its per unit variable costs follow.Direct materials.Direct laborVariable overhead costsVariable selling and administrative costsFor the next year, management will use a new material, which will reduce direct materials costs to $4.50 per unit andreduce direct labor costs to $2 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling andadministrative costs per unit will not change. Management is also considering raising its selling price to $30 per unit,which would decrease unit sales volume to 36,000 units.2. Prepare a contribution margin income statement for next year with two columns showing the expected results of (a) using the newmaterial and (b) using the new material and increasing the selling price.BURCHARD COMPANYContribution Margin Income StatementNumber of units:$ 8.005.001.000.50With new material40,000With newmaterial andprice increase36,000

CVP analysis is used to identify the changes in costs and volume that affect a company's operating…

2. Prepare a contribution margin income statement for next year with two columns showing the expected results of (a) using the r material and (b) using the new material and increasing the selling price. BURCHARD COMPANY Contribution Margin Income Statement Number of units: With new material 40,000 With new material and price increase 36,000

2. Prepare a contribution margin income statement for next year with two columns showing the expected results of (a) using the r material and (b) using the new material and increasing the selling price. BURCHARD COMPANY Contribution Margin Income Statement Number of units: With new material 40,000 With new material and price increase 36,000

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 17E: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside...

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