Question

Please help with the following:

Cost-Volume-Profit Relations: Missing Data

Following are data from 4 separate companies. Supply the missing data in each independent case.

	Case 1	Case 2	Case 3	Case 4
Sales revenue	$100,000	$100,000	Answer	Answer
Contribution margin	$40,000	Answer	$20,000	Answer
Fixed costs	$20,000	Answer	Answer	Answer
Net income	Answer	$5,000	$9,000	Answer
Variable cost ratio	Answer	0.50	Answer	0.20
Contribution margin ratio	Answer	Answer	0.50	Answer
Break-even point (dollars)	Answer	Answer	Answer	$25,000
Margin of safety (dollars)	Answer	Answer	Answer	$20,000

and part D PLEASE:

In the year 2013, Wiggins Processing Company had the following contribution income statement:

WIGGINS PROCESSING COMPANY Contribution Income Statement For the Year 2013
Sales		$ 1,200,000
Variable costs
Cost of goods sold	$ 420,000
Selling and administrative	200,000	(620,000)
Contribution margin		580,000
Fixed Costs
Factory overheard	205,000
Selling and administrative	80,000	(285,000)
Before-tax profit		295,000
Income taxes (36%)		(106,200)
After-tax profit		$ 188,800

(a) Determine the annual break-even point in sales dollars.

Round contribution margin ratio to two decimal places for your calculation.
$Answer

(b) Determine the annual margin of safety in sales dollars.

Use rounded answer from above for calculation.
$Answer

(c) What is the break-even point in sales dollars if management makes a decision that increases fixed costs by $57,000?

Use rounded contribution margin ratio (2 decimal places) for your calculation.
$Answer

(d) With the current cost structure, including fixed costs of $285,000, what dollar sales volume is required to provide an after-tax net income of $200,000?

Use rounded contribution margin (2 decimal places) for calculation. Round your answer to the nearest dollar.
$Answer

Answer 1

				Case 1	Case 2	Case 3	Case 4
Sales revenue				$ 100,000.00	$ 100,000.00	$   40,000.00	$   45,000.00
Contribution margin				$   40,000.00	$   50,000.00	$   20,000.00	$   36,000.00
Fixed costs				$   20,000.00	$   45,000.00	$   11,000.00	$   20,000.00
Net income				$   20,000.00	$     5,000.00	$     9,000.00	$   16,000.00
Variable cost ratio				0.6	0.5	0.5	0.2
Contribution margin ratio				0.4	0.5	0.5	0.8
Break-even point (dollars)				$   50,000.00	$   90,000.00	$   22,000.00	$   25,000.00
Margin of safety (dollars)				$   50,000.00	$   10,000.00	$   18,000.00	$   20,000.00

Formulas used:

A В D Е F G Н Case 1 Case 2 Case 3 Case 4 G3/G7 2 Sales revenue 3 Contribution margin 4 Fixed costs 100000 100000 =H8+H9 F2-(F2* F6) 20000 H2-(H2*H6) 40000 20000 ЕH7*н8 =F3-F5 G3- G5 5 Net income 5000 E3-E4 9000 ЕНЗ-Н4 | =(E2-E3)/E2 -Е3/Е2 -E4/E7 | =(G2-G3)/G2 6 Variable cost ratio 0.5 0.2 7 Contribution margin ratio 8 Break-even point (dollars) -F3/F2 F4/F7 Енз/н2 0.5 G4/G7 25000 9 Margin of safety (dollars) E2-E8 =F2-F8 G2-G8 20000

General Formulas:

Break Even Point (dollars) =			Fixed Cost / Cont. Margin Ratio
Margin of safety (dollars) =			Sales Revenue - Break even point (dollars)
Variable cost ratio		=	(Sales Revenue - Contribution Margin) / Sales Revenue
Cont. Margin Ratio		=	Contribution Margin / Sales Revenue

a)	Break Even Point (dollars) =			Fixed Cost / Cont. Margin Ratio
	Fixed Cost		=	$ 285,000.00
	Con. Margin ratio		=	Contribution Margin / Sales Revenue
			=	$ 580000 / $ 1200000
			=	0.48
	Break Even Point (dollars) =			$ 285000 / 0.48
			=	$ 593,750.00

b)	Margin of safety (dollars) =			Sales Revenue - Break even point (dollars)
			=	$ 1200000 - $ 593750
			=	$ 606,250.00

c)	Break Even Point (dollars) =			($ 285000 + $ 57000) / 0.48
			=	$ 712,500.00

d)	After tax net income		=	$     200,000.00
	Income Tax Rate		=	36%
	Before tax income		=	$     312,500.00	($ 200000 x 100 / 64)
Add:	Fixed Cost			$     285,000.00
	Contribution Margin			$     597,500.00
	Con. Margin ratio		=	0.48
	Dollar sales value		=	$       1,244,792