Question

E18.13 (LO 3, 4) Billings Company has the following information available for September 2020. Unit selling price of video game consoles Unit variable costs Total fixed costs Units sold $ 400 $ 280 $54,000 600 Instructions a. Compute the unit contribution margin. b. Prepare a CVP income statement that shows both total and per unit amounts. c. Compute Billings' break-even point in units. d. Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.

Answer 1

Required: a Unit Contribution margin = Unit Selling Price - Unit variable cost Unit Selling price Unit variable cost 2801 Unit contribution margin 120 400 Required: b BILLINGS COMPANY CVP Income Statement For the month ended September 30, 2020 Total Sales 240000 Less: Variable expenses 168000 Contribution margin 72000 Less: Fixed cost 54000 Net Income 18000 Per Unit 400 280 120

Required: Bep Units = Fixed Cost Contributuionmargin per unit Fixed cost 54000 Contribution margin per unit 120 Bep Units 450 Required: BILLINGS COMPANY CVP Income Statement For the month ended September 30, 2020 Total Sales 180000 Less: Variable expenses 126000 Contribution margin 54000 Less: Fixed cost 54000 Net Income Per Unit 400 280 1201

5900 Requirement: a BEP In Rooms = Fixed cost / Sales - Variable cost Fixed cost 8100 Sales - Variable cost (60 - 42) Bep In Rooms 450 Working Notes Fixed cost: Salaries Utilities Depreciation Maintenance Total fixed cost 11000 1000 100 8100 Requirement: b BEP In Dollars= Fixed cost / Contribution margin ratio Fixed cost 8100 Contribution margin ratio 0.3 Bep In Dollars 27000 Variable cost: Maid service Other costs 14 Total Variablecost