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.) 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: (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 Assume that more than one product is being sold in each of the four following case situations: Case #2 Case #4 Sales $ $ $ 291,000 98,940 Variable expenses Fixed expenses Net operating income (loss) Contribution margin ratio (percent) Case #1 454,000 313,260 X 83,680 X 57,060 39 204,000 134,640 53,000 16,360 34 Case #3 727,775 X 145,555 X 473,000 81,400 80 $ $ $ $ 139,880 X (40,940) 34 % % % % %

Answer 1

Case #1:

Contribution margin ratio = (Sales - Variable expenses) / Sales
0.39 = ($454,000 - Variable expenses) / $454,000
$177,060 = $454,000 - Variable expenses
Variable expenses = $276,940

Net operating income (loss) = Sales - Variable expenses - Fixed expenses
$57,060 = $454,000 - $276,940 - Fixed expenses
Fixed expenses = $120,000

Case #3:

Contribution margin ratio = (Sales - Variable expenses) / Sales
0.80 = (Sales - Variable expenses) / Sales
Sales - Variable expenses = 0.80 * Sales
Variable expenses = 0.20 * Sales

Net operating income (loss) = Sales - Variable expenses - Fixed expenses
$81,400 = Sales - 0.20 * Sales - $473,000
$81,400 = 0.80 * Sales - $473,000
0.80 * Sales = $554,400
Sales = $693,000

Variable expenses = 0.20 * Sales
Variable expenses = 0.20 * $693,000
Variable expenses = $138,600

Case #4:

Net operating income (loss) = Sales - Variable expenses - Fixed expenses
-$40,940 = $291,000 - $98,940 - Fixed expenses
Fixed expenses = $233,000

Contribution margin ratio = (Sales - Variable expenses) / Sales
Contribution margin ratio = ($291,000 - $98,940) / $291,000
Contribution margin ratio = $192,060 / $291,000
Contribution margin ratio = 66%