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.

Answer 1

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

=$400 -$280 =$120 per unit

b)-

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

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

=$54000/$120 per unit =450 units

d)-

Billings Company
CVP Income statment
	450 Units
Particulars	$ per unit	Total $
Sales value	400	450 units*$400 per unit =180000
Less:-
Variable cost	280.00	450 units*$280 per unit =126000
Contribution margin	120.00	54000
Less:- Fixed cost	90	54000
Contribution margin	0.00	Nil