Question

Chung, Inc. sells 100,000 wrenches for $24 per unit. Fixed costs are $700,000 and net income is $500,000. What should be reported as variable expenses in the CVP income statement

Answer 1

$1,200,000

Step-by-step explanation:

Contribution = Fixed cost + Net operating income

= $700,000 + $500,000

= $1,200,000

Variable expenses = Sales - Contribution

= 100,000*$24 - $1,200,000

= 2,400,000 -- $1,200,000

= $1,200,000

Therefore, the variable expenses is $1,200,000