The GAAP income statement for Wildhorse Company for the year ended December 31, 2022, shows sales $950,000, cost of goods sold $595,000, and operating expenses $165,000. Assuming all costs and expenses are 80% variable and 20% fixed, prepare a CVP income statement through contribution margin. Sales Variable Expenses Contribution Margin Fixed Expenses PACE COMPANY CVP Income Statement $ $ 950000
The GAAP income statement for Wildhorse Company for the year ended December 31, 2022, shows sales $950,000, cost of goods sold $595,000, and operating expenses $165,000. Assuming all costs and expenses are 80% variable and 20% fixed, prepare a CVP income statement through contribution margin. Sales Variable Expenses Contribution Margin Fixed Expenses PACE COMPANY CVP Income Statement $ $ 950000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The image provides data for preparing a CVP (Cost-Volume-Profit) income statement for Wildhorse Company for the year ended December 31, 2022. The details are as follows:
- Sales: $950,000
- Cost of Goods Sold: $595,000
- Operating Expenses: $165,000
Assumptions: All costs and expenses are 80% variable and 20% fixed.
Below these details is a table labeled "PACE COMPANY CVP Income Statement" with various fields to be filled:
1. **Sales**: Already filled with $950,000.
2. **Variable Expenses**: Requires calculation based on the given percentages.
3. **Contribution Margin**: Will be calculated after determining variable expenses.
4. **Fixed Expenses**: Requires calculation using the fixed cost percentages.
5. **Net Income / (Loss)**: Calculated after subtracting fixed expenses from the contribution margin.
To prepare the CVP statement, follow these steps:
1. **Calculate Variable Expenses**: These would be 80% of the total costs and operating expenses.
2. **Calculate Contribution Margin**: Subtract Variable Expenses from Sales.
3. **Calculate Fixed Expenses**: These would be 20% of the total costs and operating expenses.
4. **Calculate Net Income / (Loss)**: Subtract Fixed Expenses from the Contribution Margin.
The layout and fields suggest an interactive component where values are to be inputted, simulating a financial calculation exercise.
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