Exercise 7-23 Fill in Blanks; Basic CVP Relationships (LO 7-1, 7-2)Fill in the missing data for each of the following independent cases. (Ignore income taxes.) (Do not round intermediate calculations.)TotalBreak-EvenSalesRevenueVariableFixedContributionNet IncomeSalesExpensesExpensesMarginRevenue$ 40,00030,00040,0002.80,00015,00080,0003.40,00080,00050,0004.110,00022,00038,000

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Exercise 7-23 Fill in Blanks; Basic CVP Relationships (LO 7-1, 7-2)
Fill in the missing data for each of the following independent cases. (Ignore income taxes.) (Do not round intermediate calculations.)
Total
Break-Even
Sales
Revenue
Variable
Fixed
Contribution
Net Income
Sales
Expenses
Expenses
Margin
Revenue
$ 40,000
30,000
40,000
2.
80,000
15,000
80,000
3.
40,000
80,000
50,000
4.
110,000
22,000
38,000

Expert Solution

Step 1

Cost-volume-profit analysis:

It is the technique of managerial accounting that examines how changes in the volume of units sold and change in costs affects the operating profits of the company.

Assumptions of cost-volume-profit analysis:

All costs can be categorized either as variable costs or fixed costs.
Sales price per unit, variable cost per unit, and total fixed costs are constant factors.
All units produced are sold in the same accounting period, living no units unsold.

The cost-volume-profit analysis uses the mathematical presentation to derive the profit equation. For that, it basically takes the income statement format. It is based on the below formula:

Profit = Sales/Service revenue – Variable cost – Fixed cost

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