Wize University Managerial Accounting Textbook > Cost-Volume-Profit Analysis
CVP Income Statement
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The CVP Income Statement
What is the CVP Income Statement?
- Income statement that separates variable costs from fixed costs
- Also called the variable costing income statement
- More informative than traditional income statement
- Not accepted by IFRS, only for internal purposes
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Example: CVP Income Statement
ABC Inc. produces desk lamps that it sells for $50 each. The following is the cost data for the desk lamps:
If the company expects to sell 20,000 lamps this year, prepare the CVP income statement.
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Practice: CVP Income Statement
ABC Inc produces skateboards and sells them for $60 each. Each skateboard costs $5 in direct materials, $7 in direct labor, and $3 in variable manufacturing overhead. The fixed manufacturing overhead costs a total of $20,000 per month and the company pays a 5% sales commission on each unit sold. There are no other costs.
It is April 2022, and the company estimates it will sell 5,000 units this month. Prepare the CVP income statement.