Question

Hamby Inc. has sales of $2,076,000 for the first quarter of 2020. In making the sales, the company incurred the following costs and expenses.
Variable Fixed
Cost of goods sold $779,000 $614,000
Selling expenses 96,700 63,500
Administrative expenses 81,600 70,800

Required:
Prepare a CVP income statement for the quarter ended March 31, 2017.

Answer 1

Answer:

Net income= $370,301

Explanation:

First, we need to calculate the total variable costs and the total fixed costs:

Total variable cost= 779,000 + 96,700 + 81,600

Total variable cost= $957,399

Total fixed cost= 614,000 + 63,500 + 70,800

Total fixed cost= $748,300

Now, we make the CVP income statement:

Sales= 2,076,000

Total variable cost= (957,399)

Total contribution margin= 1,118,601

Total fixed cost= (748,300)

Net income= $370,301