Question

Question No. 5-3

For each of the three independent situations below computes the missing amounts (1.5 marks)

S/No.	Sales	Variable costs	Contribution margin per unit	Fixed costs	Operating income	Units sold
1	?	120,000	20	?	25,000	4,000
2	180,000	?	?	45,000	30,000	5,000
3	600,000	?	30	150,000	90,000	?

(write the answer in text form, dont post the screenshot)

Answer 1

we will use the following formula:

sales-variable cost- fixed cost = operating income

sales-variable cost = contribution margin

(1) variable cost per unit

=$120,000/4,000

=$30 per unit

sales-variable cost = contribution margin

sales-$30=$20

sales = $50

Total sales= $50*4,000

=$200,000

sales-variable cost- fixed cost = operating income

$200,000-$120,000-fixed cost = $25,000

fixed cost = $55,000

(2) sales-variable cost- fixed cost = operating income

$180,000-variable cost-$45,000=$30,000

Variable cost = $105,000

sales-variable cost = contribution margin

$180,000-$105,000=contributionm margin

Contribution margin =$75,000

contribution margin per unit=$75,000/5,000 units

=$15

(3)

sales-variable cost- fixed cost = operating income

$600,000-variable cost -$150,000=$90,000

Variable cost = $360,000

sales-variable cost = contribution margin

$600,000-$360,000 = contribution margin

=$240,000

contribution margin per unit= contribution margin/units sold

$30= $240,000/units sold

Units sold= 8,000 units

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