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The following information is available for Sheridan Company:

Sales $670000
Total fixed expenses $150000
Cost of goods sold 470000
Total variable expenses 420000

A CVP income statement would report:_______

a. Gross profit of $160,000
b. contribution margin of $400,000
c. gross profit of $190,000
d. contribution margin of $190,000

1 Answer

4 votes

Answer:

The answer is $250,000

Step-by-step explanation:

NOTE: The answer to the question is not among the options.

Contribution margin in Cost-Volume-Profit (CVP) is sales minus variable cost.

Sales - $670,000

Total variable expenses $420,000

Therefore in CVP income statement, contribution margin is:

$670,000 - $420,000

= $250,000.

Gross profit is can never be calculated in CVP income statement

User Mohammad Roshani
by
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