E22-10. Prepare CVP income statements. (LO 3, 4) Billings Company has the follow

Question

E22-10. Prepare CVP income statements. (LO 3, 4) Billings Company has the following information available for September 2017. Unit selling price of video game consoles $???400 Unit variable costs $???280 Total fixed costs $54,000 Units sold 600 Instructions (a) Compute the unit contribution margin. (b) Prepare a CVP income statement that shows both total and per unit amounts. (c) Compute Billings' break-even point in units. (d) Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.

Explanation / Answer

Answer-a)-Unit contribution margin:-Selling price per unit –Variable cost per unit

=$400 -$280 =$120 per unit

b)-

c)-Break even point in units =Fixed cost/ Unit contribution margin

=$54000/$120 per unit =450 units

d)-

Billings Company CVP Income statment 600 Units Particulars $ per unit Total $ Sales value 400 600 units*$400 per unit =240000 Less:- Variable cost 280.00 600 units*$280 per unit =168000 Contribution margin 120.00 72000 Less:- Fixed cost 90 54000 Contribution margin 30.00 18000

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