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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
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.
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.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education