Exercise 18-13 Cannes Company has the following information available for Septem
ID: 2493482 • Letter: E
Question
Exercise 18-13
Cannes Company has the following information available for September 2014.
(a) Compute the contribution margin per unit.
(b) Prepare a CVP income statement that shows both total and per unit amounts.
CANNES COMPANY
CVP Income Statement
For the Month Ended September 30, 2014
Total
Per Unit
(c) Compute Cannes' break-even point in units.
(d) Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.
CANNES COMPANY
CVP Income Statement
For the Month Ended September 30, 2014
Total
Per Unit
Unit selling price of video game consoles $696 Unit variable costs $479 Total fixed costs $86,800 Units sold 1,044Explanation / Answer
A. Contribution margin per unit = Unit Selling Price – Unit Variable cost = $696 - $479 = $217
B. CVP Income Statement
CANNES COMPANY
CVP INCOME STATEMENT FOR THE MONTH ENDED SEPTEMBER 30,2014
Particulars
Total (in $)
Per Unit (in $)
Sales
726,624
696
Less: Variable Cost
500,076
479
Contribution Margin
226,548
217
Less: Fixed Cost
86,800
Net Income
139,748
Number of Units = 1,044
C. Breakeven point in units = Fixed cost/Contribution margin = $86,800/$217 = 400 units
D. CVP Income Statement for Breakeven Point
CANNES COMPANY
CVP INCOME STATEMENT FOR THE MONTH ENDED SEPTEMBER 30,2014
Particulars
Total (in $)
Per Unit (in $)
Sales
278,400
696
Less: Variable Cost
191,600
479
Contribution Margin
86,800
217
Less: Fixed Cost
86,800
Net Income
0
Number of Units = 400
CANNES COMPANY
CVP INCOME STATEMENT FOR THE MONTH ENDED SEPTEMBER 30,2014
Particulars
Total (in $)
Per Unit (in $)
Sales
726,624
696
Less: Variable Cost
500,076
479
Contribution Margin
226,548
217
Less: Fixed Cost
86,800
Net Income
139,748
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