Restate the following income statement for a retailer in contribution format. Sales revenue ($100 per unit) $ 70,000 Less cost of goods sold ($58 per unit) 40,600 Gross margin 29,400 Less operating costs: Commissions expense ($6 per unit) $ 4,200 Salaries expense 7,900 Advertising expense 5,900 Shipping expense ($1 per unit) 700 18,700 Operating income $ 10,700 Per Unit select an income statement item $enter a dollar amount $enter a dollar amount select an opening name for section one : select an income statement item $enter a dollar amount enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount select a closing name for section one enter a total amount for section one enter a total amount for section one select a summarizing line for the first part enter a total amount for the first part $enter a total amount for the first part select an opening name for section two : select an income statement item enter a dollar amount select an income statement item enter a dollar amount select a closing name for section two enter a total amount for section two select a closing name for this statement $enter a total amount for this statemen
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.
Restate the following income statement for a retailer in contribution format.
| Sales revenue ($100 per unit) | $ | 70,000 | ||||
| Less cost of goods sold ($58 per unit) |
|
40,600 | ||||
| Gross margin | 29,400 | |||||
| Less operating costs: | ||||||
| Commissions expense ($6 per unit) | $ | 4,200 | ||||
| Salaries expense | 7,900 | |||||
| Advertising expense | 5,900 | |||||
| Shipping expense ($1 per unit) |
|
700 |
|
18,700 | ||
| Operating income | $ | 10,700 |
|
Per Unit
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|---|---|---|---|---|---|---|
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select an income statement item
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$enter a dollar amount | $enter a dollar amount | ||||
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select an opening name for section one :
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||||||
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select an income statement item
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$enter a dollar amount | enter a dollar amount | ||||
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select an income statement item
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enter a dollar amount | enter a dollar amount | ||||
|
select an income statement item
|
enter a dollar amount | enter a dollar amount | ||||
|
select a closing name for section one
|
enter a total amount for section one | enter a total amount for section one | ||||
|
select a summarizing line for the first part
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enter a total amount for the first part | $enter a total amount for the first part | ||||
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select an opening name for section two :
|
||||||
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select an income statement item
|
enter a dollar amount | |||||
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select an income statement item
|
enter a dollar amount | |||||
|
select a closing name for section two
|
enter a total amount for section two | |||||
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select a closing name for this statement
|
$enter a total amount for this statement |
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