Question

Mills Manufacturing Inc. had sales for January 2020 of $1,025,000. The units sold were 20,500, and the expenses for January 2020 were as follows: Cost of goods sold$205,000 $131,200 61,500 31,775 Administrative expenses 28,700 34,850 Seling expenses Prepare a detailed CVP income statement for the month ended January 31, 2020. (Round per unit cost to 2 decimal places, e.g. 15.25.) Mills CVP I Per unit

Answer 1

Solution

Mills Manufacturing Inc.
CVP Income statement
For the month ended January 31, 2020
		Total	Per unit
Sales revenue		$ 10,25,000.00	$     50.00
Less: Variable costs
Variable Cost of goods sold	$ 2,05,000.00
Variable selling expense	$      61,500.00
Variable administrative expense	$      28,700.00
Total variable costs		$    2,95,200.00	$     14.40
Contribution margin		$    7,29,800.00	$     35.60
Less: Fixed costs
Fixed Cost of goods sold	$ 1,31,200.00
Fixed selling expense	$      31,775.00
Fixed administrative expense	$      34,850.00
Total fixed costs		$    1,97,825.00	$       9.65
Net Operating income		$    5,31,975.00	$     25.95

Requirement 2

Contribution margin= $35.60 per unit

Requirement 3

Contribution margin ratio = 71.20%

CM ratio = CM/Sales

CM ratio= 35.60/50=70.20%