Question

Sheridan Industries produces and sells a cell phone-operated home security control. Information regarding the costs and sales of security controls during May 2020 are provided below.

Unit selling price of security control $45
Unit variable costs $22
Total monthly fixed costs $120,000
Units sold 8,000

Required:
Prepare a CVP income statement for Cedar Grove Industries for the month of May. Provide per unit values and total values.

Answer 1

Answer and Explanation:

The preparation of the CVP income statement for Cedar Grove Industries for the month of May is presented below;

Particulars         Units       Amount

net sales           $45          $360,000 (8,000 units × $45)

Less:

Variable expense $22      -$176,000 (8,000 units × $22)

Contribution margin  $23    $184,000

Less:

Fixed cost                           -$120,000

Net income                           $64,000