Carey company had sales in 2016 of $1,560,000 on 60,000 units. variable costs totaled $900,000, and fixed costs totaled $500,000. a new raw material is available that will decrease the variable costs per unit by 20% (or $3). however, to process the new raw material, fixed operating costs will increase by $100,000. 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.
(a) prepare a projected cvp income statement for 2017, assuming the changes have not been made.
(b) assuming that changes are made as described.