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Calculate the missing amounts for each of the following firms: (Do not round intermediate calculations. Round Selling Price
Backus Inc, makes and sells many consumer products. The firms average contribution margin ratio is 35%. Management is consid
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Answer #1

1) Calculate following

Units sold Selling price Variable cost per unit Contribution margin Fixed costs Operating income (loss)
Firm A 10000 25 (250000-100000)/10000 = 15 100000 40000 100000-40000 = 60000
Firm B 9000 11+19 = 30 19 66000+33000 = 99000 66000 33000
Firm C 12000/3 = 4000 7 4 12000 12000+6000 = 18000 -6000
Firm D 4000 10+50 = 60 50 40000 48000 40000-48000 = -8000

2a) Selling price = 7.8*100/65 = 12

2b) Number of units = (15000+6000)/4.2 = 5000 Units

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