Question

Vaughn Manufacturing sells 200000 units for $11 a unit. Fixed costs are $350000 and net income...

Vaughn Manufacturing sells 200000 units for $11 a unit. Fixed costs are $350000 and net income is $250000. What should be reported as variable expenses in the CVP income statement?

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Answer #1

Answer: Variable Expense = $1,600,000

Explanation:

Net Income = Sales Revenue - Variable Expense - Fixed Cost

Number of units sold (Given)= 200,000 units

Selling price per unit (Given)= $11 per unit

Therefore, Sales Revenue = 200,000 units * $11

= $2,200,000

Fixed Costs (Given) = $350,000

Net Income (Given)= $250,000

Net Income = Sales Revenue - Variable expense - Fixed costs

Therefore, Variable Expense = Sales Revenue - Fixed Cost - Net Income

= 2,200,000 - 350,000 - 250,000

= $1,600,000

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