Asked by Mahaan Manda on May 18, 2024
Verified
Norton Inc. has the following information available for September 2016. Unit selling price of video game consoles $400 Unit variable costs $280 Total fixed costs $48,000 Units sold 500\begin{array}{lr}\text { Unit selling price of video game consoles } & \$ 400 \\\text { Unit variable costs } & \$ 280 \\\text { Total fixed costs } & \$ 48,000 \\\text { Units sold } & 500\end{array} Unit selling price of video game consoles Unit variable costs Total fixed costs Units sold $400$280$48,000500 Instructions
(a) Prepare a CVP income statement that shows both total and per unit amounts.
(b) Compute Norton's breakeven in units.
CVP Income Statement
A financial statement that shows the effects of changes in costs and volume on a company's profits using Cost-Volume-Profit analysis.
Breakeven
The point at which total revenues equal total costs, resulting in neither profit nor loss.
Unit Selling Price
The price at which individual units of a product are sold to customers, not including discounts or added taxes.
- Comprehend the essential aspects of carrying out a Cost-Volume-Profit (CVP) analysis.
- Calculate the intersection points for break-even in both numerical and fiscal dimensions using assorted input variables.
- Prepare and assess a CVP financial statement, perceiving its relevance in influencing management's decisions.
Verified Answer
NM
Nicolas MartinezMay 25, 2024
Final Answer :
(a)
NORTON, INC. COMPANY CVP Income Statement For the Month Ended September 30, 2016 Total Per Unit Sales (500 video game consoles) $200,000$400Variable costs 140,000280 Contribution margin 60,000$120 Fixed costs. 48,000 Net income $12,000\begin{array}{c}\text {NORTON, INC. COMPANY }\\\text {CVP Income Statement}\\\text { For the Month Ended September 30, 2016}\\\\\begin{array}{llr}&\text { Total}&\text { Per Unit }\\ \text {Sales (500 video game consoles) } &\$200,000&\$400\\ \text {Variable costs } &140,000&280\\ \text { Contribution margin } &60,000&\$120\\ \text { Fixed costs. } &48,000\\ \text { Net income } &\$12,000\\\end{array}\end{array}NORTON, INC. COMPANY CVP Income Statement For the Month Ended September 30, 2016Sales (500 video game consoles) Variable costs Contribution margin Fixed costs. Net income Total$200,000140,00060,00048,000$12,000 Per Unit $400280$120
(b) Sales = Variable costs + Fixed costs
$400X = $280X + $48000
$120X = 48000
= 400 units
NORTON, INC. COMPANY CVP Income Statement For the Month Ended September 30, 2016 Total Per Unit Sales (500 video game consoles) $200,000$400Variable costs 140,000280 Contribution margin 60,000$120 Fixed costs. 48,000 Net income $12,000\begin{array}{c}\text {NORTON, INC. COMPANY }\\\text {CVP Income Statement}\\\text { For the Month Ended September 30, 2016}\\\\\begin{array}{llr}&\text { Total}&\text { Per Unit }\\ \text {Sales (500 video game consoles) } &\$200,000&\$400\\ \text {Variable costs } &140,000&280\\ \text { Contribution margin } &60,000&\$120\\ \text { Fixed costs. } &48,000\\ \text { Net income } &\$12,000\\\end{array}\end{array}NORTON, INC. COMPANY CVP Income Statement For the Month Ended September 30, 2016Sales (500 video game consoles) Variable costs Contribution margin Fixed costs. Net income Total$200,000140,00060,00048,000$12,000 Per Unit $400280$120
(b) Sales = Variable costs + Fixed costs
$400X = $280X + $48000
$120X = 48000
= 400 units
Learning Objectives
- Comprehend the essential aspects of carrying out a Cost-Volume-Profit (CVP) analysis.
- Calculate the intersection points for break-even in both numerical and fiscal dimensions using assorted input variables.
- Prepare and assess a CVP financial statement, perceiving its relevance in influencing management's decisions.