Russell Inc. had sales of $2,200,000 for the first quarter of 2017. In making the sales, the company incurred the following costs and expenses. Variable Fixed Cost of goods sold $920,000 $440,000 Selling expenses 70,000 45,000 Administrative expenses 86,000 98,000 Prepare a CVP income statement for the quarter ended March 31, 2017. RUSSELL INC. CVP Income Statement $ $

Sales                                                     2,200,000

Less Variable Costs:

Cost of goods sold                                (920,000)

Selling expenses                                     (70,000)

Administrative expenses                         (86,000)

Contribution                                            1,124,000

Less Fixed Costs

Cost of goods sold                               (440,000)

Selling expenses                                     (45,000)

Administrative expenses                        (98,000)

Net Income                                               541,000

Explanation:

A CVP income statement is also known as a Variable Costing Income Statement and is written up as follows :

Sales                                                     2,200,000

Less Variable Costs:

Cost of goods sold                                (920,000)

Selling expenses                                     (70,000)

Administrative expenses                         (86,000)

Contribution                                            1,124,000

Less Fixed Costs

Cost of goods sold                               (440,000)

Selling expenses                                     (45,000)

Administrative expenses                        (98,000)

Net Income                                             541,000

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