Question

When I try to make a CVP income statement with the following data I end up...

When I try to make a CVP income statement with the following data I end up with a negative net income. What am I doing wrong?

Variable costs
Particulars Amount
Direct material (300000*0.80) 240000
Direct labour(300000*2) 600000
Packaging (300000*0.75) 225000
Variable manufacturing overhead(300000*1.2) 360000
Sales commission (300000*0.80) 240000
Shipping(300000*0.50) 150000
Total variable cost 1815000
Fixed costs
Particulars Amount
Fixed manufacturing overhead 540000
Fixed advertising and promotion 180000
Fixed selling and administration 270000
Total fixed costs 990000


Sales 2,400,000 total, $8 per unit. Variable costs 1,815,000 total and 6.05 per unit. Contribution Margin 585,000 or 2 per unit. Fixed costs $990,000. Net Loss 405,000. I'm not supposed to have a net loss.

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Answer #1

**variable cost of sales :.80+2+.75+2 = 4.75

Income statment
sales 2,400,000
less:variable cost
variable cost of sales [4.75*300000] 1425000
variable selling [300000*1.3] 390000
Total variable cost 1815000
contribution margin 585000
less:fixed cost
Fixed manufacturing overhead
Fixed advertising and promotion 540000
Fixed selling and administration 180000
Total fixed cost 270000 (990000)
Net Income /(loss) (405000)

***As per Information/data given there will be a loss of 405000..Is there any other data provided.

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