Question

Crane Industries produces and sells a cell phone-operated home security control. Information regarding the costs and sales of security controls during May 2020 are provided below.

Unit selling price of security control $49
Unit variable costs $24
Total monthly fixed costs $134,000
Units sold 8,300
Required:
1. Prepare a CVP income statement for Crane Industries for the month of May.

Answer 1

Crane Industries

CVP Income Statement for the month of May.

Total Per Unit

Sales(8,300 x 49) 406,700 $49

Less: Variable cost 199,200 $24

(8300 x 24)

Contribution Margin 207,500 $25

Less: Fixed cost 134,000

Net income 73,500

Break-even Point = 134,000 / 25 = 5,360 units

Contribution Margin = 25 / 49 = 0.51 = 51%

Variable Expense Ratio = 199,200 / 406,700 = 0.49 = 49%