Cost-Volume-Profit (CVP) Income Statement: The cost-volume-profit income statement refers to that income statement which highlights the cost behavior as a variable cost and fixed costs. It also shows the contribution margin of the company. This statement is for the internal use in the company. The format of this statement depends upon the need of the business. Break-Even Point: The break-even point is a point where the total cost incurred is same as the total revenue earned. At the break-even point, the profit will be zero. The break-even point is the point in the business where there is no loss and no gain. Contribution Margin Ratio: The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit. Margin of Safety Ratio: The margin of safety is the difference between the actual value of the sales and the break-even sales value. When this amount is compared with the expected value of sales and the value expressed in percentage is the margin of safety ratio. To prepare: The CVP income statement for the year 2017.

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Answer 1

Question

Chapter 22, Problem 22.2AP

(a)

To determine

Cost-Volume-Profit (CVP) Income Statement: The cost-volume-profit income statement refers to that income statement which highlights the cost behavior as a variable cost and fixed costs. It also shows the contribution margin of the company. This statement is for the internal use in the company. The format of this statement depends upon the need of the business.

Break-Even Point: The break-even point is a point where the total cost incurred is same as the total revenue earned. At the break-even point, the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

Contribution Margin Ratio: The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

Margin of Safety Ratio: The margin of safety is the difference between the actual value of the sales and the break-even sales value. When this amount is compared with the expected value of sales and the value expressed in percentage is the margin of safety ratio.

To prepare: The CVP income statement for the year 2017.

(b)

To determine

The break-even point in units and dollars.

(c)

To determine

The contribution margin ratio and margin of safety ratio.

(d)

To determine

The sales, in dollars, required to earn the targeted net income.

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Answer 2

Question

Chapter 22, Problem 22.2AP

(a)

To determine

Cost-Volume-Profit (CVP) Income Statement: The cost-volume-profit income statement refers to that income statement which highlights the cost behavior as a variable cost and fixed costs. It also shows the contribution margin of the company. This statement is for the internal use in the company. The format of this statement depends upon the need of the business.

Break-Even Point: The break-even point is a point where the total cost incurred is same as the total revenue earned. At the break-even point, the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

Contribution Margin Ratio: The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

Margin of Safety Ratio: The margin of safety is the difference between the actual value of the sales and the break-even sales value. When this amount is compared with the expected value of sales and the value expressed in percentage is the margin of safety ratio.

To prepare: The CVP income statement for the year 2017.

(b)

To determine

The break-even point in units and dollars.

(c)

To determine

The contribution margin ratio and margin of safety ratio.

(d)

To determine

The sales, in dollars, required to earn the targeted net income.

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Answer 3

Question

Chapter 22, Problem 22.2AP

(a)

To determine

Cost-Volume-Profit (CVP) Income Statement: The cost-volume-profit income statement refers to that income statement which highlights the cost behavior as a variable cost and fixed costs. It also shows the contribution margin of the company. This statement is for the internal use in the company. The format of this statement depends upon the need of the business.

Break-Even Point: The break-even point is a point where the total cost incurred is same as the total revenue earned. At the break-even point, the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

Contribution Margin Ratio: The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

Margin of Safety Ratio: The margin of safety is the difference between the actual value of the sales and the break-even sales value. When this amount is compared with the expected value of sales and the value expressed in percentage is the margin of safety ratio.

To prepare: The CVP income statement for the year 2017.

(b)

To determine

The break-even point in units and dollars.

(c)

To determine

The contribution margin ratio and margin of safety ratio.

(d)

To determine

The sales, in dollars, required to earn the targeted net income.

Expert Solution & Answer

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Answer 4

Question

Chapter 22, Problem 22.2AP

(a)

To determine

Cost-Volume-Profit (CVP) Income Statement: The cost-volume-profit income statement refers to that income statement which highlights the cost behavior as a variable cost and fixed costs. It also shows the contribution margin of the company. This statement is for the internal use in the company. The format of this statement depends upon the need of the business.

Break-Even Point: The break-even point is a point where the total cost incurred is same as the total revenue earned. At the break-even point, the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

Contribution Margin Ratio: The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

Margin of Safety Ratio: The margin of safety is the difference between the actual value of the sales and the break-even sales value. When this amount is compared with the expected value of sales and the value expressed in percentage is the margin of safety ratio.

To prepare: The CVP income statement for the year 2017.

(b)

To determine

The break-even point in units and dollars.

(c)

To determine

The contribution margin ratio and margin of safety ratio.

(d)

To determine

The sales, in dollars, required to earn the targeted net income.

Expert Solution & Answer

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Answer 5

Chapter 22, Problem 22.2AP

(a)

To determine

Cost-Volume-Profit (CVP) Income Statement: The cost-volume-profit income statement refers to that income statement which highlights the cost behavior as a variable cost and fixed costs. It also shows the contribution margin of the company. This statement is for the internal use in the company. The format of this statement depends upon the need of the business.

Break-Even Point: The break-even point is a point where the total cost incurred is same as the total revenue earned. At the break-even point, the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

Contribution Margin Ratio: The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

Margin of Safety Ratio: The margin of safety is the difference between the actual value of the sales and the break-even sales value. When this amount is compared with the expected value of sales and the value expressed in percentage is the margin of safety ratio.

To prepare: The CVP income statement for the year 2017.

(b)

To determine

The break-even point in units and dollars.

(c)

To determine

The contribution margin ratio and margin of safety ratio.

(d)

To determine

The sales, in dollars, required to earn the targeted net income.

Answer 6

Chapter 22, Problem 22.2AP

(a)

To determine

Cost-Volume-Profit (CVP) Income Statement: The cost-volume-profit income statement refers to that income statement which highlights the cost behavior as a variable cost and fixed costs. It also shows the contribution margin of the company. This statement is for the internal use in the company. The format of this statement depends upon the need of the business.

Break-Even Point: The break-even point is a point where the total cost incurred is same as the total revenue earned. At the break-even point, the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

Contribution Margin Ratio: The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

Margin of Safety Ratio: The margin of safety is the difference between the actual value of the sales and the break-even sales value. When this amount is compared with the expected value of sales and the value expressed in percentage is the margin of safety ratio.

To prepare: The CVP income statement for the year 2017.

Answer 7

Chapter 22, Problem 22.2AP

(a)

To determine

Cost-Volume-Profit (CVP) Income Statement: The cost-volume-profit income statement refers to that income statement which highlights the cost behavior as a variable cost and fixed costs. It also shows the contribution margin of the company. This statement is for the internal use in the company. The format of this statement depends upon the need of the business.

Break-Even Point: The break-even point is a point where the total cost incurred is same as the total revenue earned. At the break-even point, the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

Contribution Margin Ratio: The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

Margin of Safety Ratio: The margin of safety is the difference between the actual value of the sales and the break-even sales value. When this amount is compared with the expected value of sales and the value expressed in percentage is the margin of safety ratio.

To prepare: The CVP income statement for the year 2017.

Answer 8

(b)

To determine

The break-even point in units and dollars.

Answer 9

(b)

To determine

The break-even point in units and dollars.

Answer 10

(c)

To determine

The contribution margin ratio and margin of safety ratio.

Answer 11

(c)

To determine

The contribution margin ratio and margin of safety ratio.

Answer 12

(d)

To determine

The sales, in dollars, required to earn the targeted net income.

Answer 13

(d)

To determine

The sales, in dollars, required to earn the targeted net income.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 22 - Prob. 1Q Ch. 22 - Prob. 2Q Ch. 22 - Prob. 3Q Ch. 22 - Prob. 4Q Ch. 22 - Prob. 5Q Ch. 22 - Prob. 6Q Ch. 22 - Prob. 7Q Ch. 22 - Prob. 8Q Ch. 22 - 9. “Cost-volume-profit (CVP) analysis is based...Ch. 22 - Prob. 10Q

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The break-even point in units and dollars.

The contribution margin ratio and margin of safety ratio.

The sales, in dollars, required to earn the targeted net income.

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Chapter 22 Solutions