Question

Saved Help Save & Exit Sub Check my world 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.) Required: a. Assume that only one product is being sold in each of the four following case situations: b. Assume that more than one product is being sold in each of the four following case situations: 46 (For all requirements, Loss amounts should be indicated by a minus sign.) Complete this question by entering your answers in the tabs below. Required A Required B S Assume that more than one product is being sold in each of the four following case situations: Case #1 442,000 Case #3 $ $ Case #2 204,000 132,600 59,000 $ Case #4 290,000 89,900 Sales S Variable expenses Fixed expenses Net operating income (loss) Contribution margin ratio (percent) $ $ 472,000 68,540 78 % 82,480 T 44 % $ (22,900) % < Required A

Answer 1

Case #1

Let variable expense be 'X' and fixed expenses be 'Y'

Given,

Sales = $ 442,000

Net operating income (loss) = $ 82,480

Contribution margin ratio = 44%

Formula for contribution margin ratio = (Sales - variable expenses) / Sales

so,

44 %. = ($ 442,000 - X) / $442,000

$442,000 * 44%.    =     $ 442,000 - X.

$194480 = $ 442,000 - X

X = $ 442,000 - $ 194480

X =    $ 247,520

So , variable cost is $ 247,520

Sales - variable cost - fixed cost = net operating income

$ 442,000- $ 247,520- Y = -82,480

Y = $ 276,960

so, Fixed expense is $ 276,960

Case #2

Given,

Sales = $204,000

Variable expenses. = $132,600

Fixed expenses =. $ 59,000

Operating margin = Sales - variable expenses - fixed expenses

operating margin = $204,000 - $132,600 - $ 59,000

operating margin = $ 12,400

Contribution margin Ratio = (Sales - Variable expenses) / sales

= ( $ 204,000 - $ 132,600) / $ 204,000

Contribution margin ratio    = 35%

Case #3

Let Sales be 'X' and variable cost be 'Y'

Contribution margin ratio = (Sales - Variable cost) / Sales

  78 % = ( X -Y) / X

0.78 X = (X- Y)

Y = 0.22 X ( Equation 1)

Sales - variable expenses - Fixed expenses = Contribution

X     - Y    - $ 4,72,000 = $68,540. ( Equation 2)

Substituting Equation 1 in Equation 2,

X - 0.22 X - $472,000. =. $ 68,540

X. = $ 693,000

So,    Y = 0.22 * $ 693,000

Y =   $ 152,460

Sales is $ 693,000 and Variable expense is $ 1,52460.

Case #4

​​​​​​​Let Fixed expenses be 'X'

Sales - Fixed expenses - variable expenses = Net Operating income

$ 290,000 - X   - $ 89,900 = - $ 22,900

X = $ 223,000

So, Fixed expenses is $ 223,000

Contribution margin = (sales - variable expenses) / Sales

= ( $ 290,000 - $ 89,900 ) / $ 290,000

Contribution margin = 69 %

Fixed Expenses is $ 223,000 and contribution margin is 69%