Billings Company has the following information available for September 2017. Unit selling price of video game consoles $712 Unit variable costs $498 Total fixed costs $96,300 Units sold 1,068 Compute the unit contribution margin. Unit contribution margin eTextbook and Media Prepare a CVP income statement that shows both total and per unit amounts. BILLINGS COMPANY CVP Income Statement Total Per Unit $ $ $ $ eTextbook and Media Compute Billings’ break-even point in units. Break-even point in units units eTextbook and Media Prepare a CVP income statement for the break-even point that shows both total and per unit amounts. BILLINGS COMPANY CVP Income Statement Total Per Unit $ $ $ $ eTextbook and Media
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
| Unit selling price of video game consoles | $712 | |
| Unit variable costs | $498 | |
| Total fixed costs | $96,300 | |
| Units sold | 1,068 |
| Unit contribution margin |
eTextbook and Media
|
BILLINGS COMPANY
CVP Income Statement |
||||
|
Total
|
Per Unit
|
|||
|
$
|
$
|
|||
|
|
|
|||
|
|
$
|
|||
|
|
||||
|
$
|
eTextbook and Media
| Break-even point in units | units |
eTextbook and Media
|
BILLINGS COMPANY
CVP Income Statement |
||||
|
Total
|
Per Unit
|
|||
|
$
|
$
|
|||
|
|
|
|||
|
|
$
|
|||
|
|
||||
|
$
|
eTextbook and Media
Trending now
This is a popular solution!
Learn your way
Includes step-by-step video
Step by step
Solved in 2 steps with 3 images
