Question

Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, enter the known data, and then compute the missing items.) ht for each case, enter the known data, and thenina Required: a. Assume that only one product is being sold in each of the four following case situations: Unit sold Case #1 10,000 $ 340,000 180,000 88,000 Sales Case #4 6,000 $ 162,000 Variable expenses Case #2 Case #3 20,500 $ 357,600 L 225,500 172,000 $ (8,100) $ 139,500 $ 11 $ 111 Fixed expenses 80,000 (14,000) $ Net operating income (loss) Contribution margin per unit

Answer 1

a)				Case#1	Case#2	Case#3	Case#4
	Unit sold			10,000	14,900	20,500	6,000
	Sales			340,000	357,600	451,000	162,000
	Variable expense			180,000	193,700	225,500	96,000
	Fixed expense			88,000	172,000	86,000	80,000
	Net operating income(loss)			72,000	-8,100	139,500	-14,000
	contribution margin per unit			16	11	11	11
		Contribution = sales - variable expenses
		Sales - variable expense - fixed expense = net operating income
		Contribution margin per unit = contribution/units sold
b)				Case#1	Case#2	Case#3	Case#4
	Sales			454,000	199,000	702,000	307,000
	Variable expense			272,400	139,300	112,320	104,380
	Fixed expense			120,000	56,000	466,000	219,000
	Net operating income(loss)			61,600	3,700	123,680	-16,380
	Average contribution margin ratio			40%	30%	84%	66%
		contribution margin ratio= contribution /sales
		sales = 100%
		Variable + contribution % = 100% sales
		hence when contribution is 40% , variable expense ratio will be 60% of sales