Answer Happy

Required Information [The following information applies to the questions displayed below.] Burchard Company sold 36,000 units of its only product for $16.20 per unit this year. Manufacturing and selling the product required $302,000 of fixed costs. Its per unit variable costs follow. Direct materials $ 4.10 Direct labor 3.10 Variable overhead costs 0.41 Variable selling and administrative costs 0.21 For the next year, management will use a new material, which will reduce direct materials costs to $1.23 per unit and reduce direct labor costs to $2.17 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling and administrative costs per unit will not change. Management is also considering raising its selling price to $21.06 per unit, which would decrease unit sales volume to 30,600 units. 2. Prepare a contribution margin Income statement for next year with two columns showing the expected results of (a) using the new material and (b) using the new material and increasing the selling price. BURCHARD CO. Contribution Margin Income Statement With new material With new material and price increase 38,000 S 583,200 $ Sales Fixed costs 583,200 583,200 $ Number of units: S 30,600 644,436 644,436 644,436