Question

# The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir...

The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir

Company Sales \$455,000 \$455,000 Variable costs 273,000 227,500 Contribution margin 182,000 227,500 Fixed costs 159,250 204,750 Net income \$22,750 \$22,750

Assuming that sales revenue increases by 20%, prepare a CVP income statement for each company. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

 Blanc Company Noir Company \$Enter a dollar amount \$Enter a dollar amount Enter a dollar amount Enter a dollar amount Enter a total of the two previous amounts Enter a total of the two previous amounts Enter a dollar amount Enter a dollar amount \$Enter a total amount for this statement \$Enter a total amount for this statement

Assuming that sales revenue decreases by 20%, prepare a CVP income statement for each company. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

 Blanc Company Noir Company \$Enter a dollar amount \$Enter a dollar amount Enter a dollar amount Enter a dollar amount Enter a total of the two previous amounts Enter a total of the two previous amounts Enter a dollar amount Enter a dollar amount \$Enter a total amount for this statement \$Enter a total amount for this statement

#### Homework Answers

Answer #1
 The CVP income statement, if sales revenue increases by 20% is shown below Blanc company Noir company Sales (455,000*1.2) \$546,000 \$546,000 Variable costs \$273,000 \$227,500 Contribution margin \$273,000 \$318,500 Fixed costs \$159,250 \$204,750 Net income/(Loss) \$113,750 \$113,750 The increase in sales revenue would increase the net income The CVP income statement, if sales revenue decreases by 20% is shown below Blanc company Noir company Sales (455,000*0.80) \$364,000 \$364,000 Variable costs \$273,000 \$227,500 Contribution margin \$91,000 \$136,500 Fixed costs \$159,250 \$204,750 Net income/(Loss) -\$68,250 -\$68,250 Decrease in sales revenue would lead to loss for both company
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