Question

Blossom Inc. had sales of $2,300,000 for the first quarter of 2020. In making the sales, the company incurred the following costs and expenses.

		Variable		Fixed
Cost of goods sold		$936,000		$473,000
Selling expenses		119,000		71,000
Administrative expenses		116,000		120,000

Prepare a CVP income statement for the quarter ended March 31, 2020.

Answer 1

Solution:
Note:	This question can be sold in two format, so use the below answer in format you have been asked.
	CVP income statement is the income statement in which contribution margin is computed to reach net income, Contribution margin = Sales - total variable costs
1st format	Blossom Inc.
	CVP Income Statement
	For the quarter Ended March 31, 2020
A	Sales	2,300,000
B	Variable costs	1,171,000
C=A-B	Contribution Margin	1,129,000
D	Fixed costs	664,000
E=A-D	Net Income	465,000
Notes:	Variable costs = COGS + Selling + Admin = 936,000+119,000+116,000 = 1,171,000
	Fixed costs = COGS + Selling + Admin = 473,000+71,000+120,000 = 664,000
Second format	Blossom Inc.
	CVP Income Statement
	For the quarter Ended March 31, 2020
A	Sales		2,300,000
	Variable expenses
B	Cost of goods sold	936,000
C	Selling expenses	119,000
D	Administrative expenses	116,000
E=B+C+D	Total variable expenses		1,171,000
F=A-E	Contribution Margin		1,129,000
	Fixed expenses
G	Cost of goods sold	473,000
H	Selling expenses	71,000
I	Administrative expenses	120,000
J=G+H+I	Total fixed expenses		664,000
K=F-J	Net Income		465,000
Please feel free to ask if anything about above solution in comment section of the question.