Chapter 6, Problem 6.5E

(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.

Variable Cost: The variable costs are the costs which vary with the level of output. The variable cost is directly proportional to the number of units. Thus, it increases or decreases with the level of units of sale.

Fixed Costs: The fixed costs are the costs which do not vary with the level of output. The fixed cost is constant and is not proportional to the number of units.

To Prepare: (a) A CVP income statement, assuming no change in the given data.

(b)

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.

To Prepare: (b) A CVP income statement, assuming that changes have been made.