Chapter 22, Problem 3PSA

a.

To determine

Concept Introduction:

CVP Income statement categorizes costs into fixed and variable costs and determines contribution margin. It has similar information to a conventional income statement. However, in addition to the net income, it also shows the effects of change in volume and costs on the profit of the business. The CVP income statement is a useful statement for internal decision-making purposes.

The CVP income statement.

b.

To determine

Concept Introduction:

Cost volume profit analysis uses the relationship between cost, sales volume, and profit, and looks into the impact of varying levels of cost and volume on profitability. It determines the economic justification of the product manufactured.

The breakeven point units and dollars.

c.

To determine

Concept Introduction:

Cost volume profit analysis uses the relationship between cost, sales volume, and profit, and looks into the impact of varying levels of cost and volume on profitability. It determines the economic justification of the product manufactured.

The computation contribution margin ratio and margin of safety.

d.

To determine

Concept Introduction:

Cost volume profit analysis uses the relationship between cost, sales volume, and profit, and looks into the impact of varying levels of cost and volume on profitability. It determines the economic justification of the product manufactured.

The sales dollar required to earn a net income of $180,000.