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.)

Assume that only one product is being sold in each of the four following case situations:

a)
	Case #1 Case #2 Case #3 Case #4 Unit sold 8,500 20,500 5,600 Sales $289,000 $378,000 $156,800 Variable expenses 153,000 205,000 Fixed expenses 96,000 168,000 88,000 Net operating income (loss) $14,000 $144,500 $(26,400) Contribution margin per unit $13 $11

b)

Assume that more than one product is being sold in each of the four following case situations:

	Case #1 Case #2 Case #3 Case #4 Sales $447,000 $192,000 $292,000 Variable expenses 132,480 75,920 Fixed expenses 59,000 471,000 Net operating income (loss) $74,740 $115,500 $(7,920) Contribution margin ratio (percent) 42 % % 85 % %

Answer 1

a)				Case#1	Case#2	Case#3	Case#4
	Unit sold			8,500	14,000	20,500	5,600
	Sales			289,000	378,000	430,500	156,800
	Variable expense			153,000	196,000	205,000	95,200
	Fixed expense			96,000	168,000	81,000	88,000
	Net operating income(loss)			40,000	14,000	144,500	-26,400
	contribution margin per unit			16	13	11	11
		Contribution = sales - variable expenses
		Sales - variable expense - fixed expense = net operating income
		Contribution margin per unit = contribution/units sold
b)				Case#1	Case#2	Case#3	Case#4
	Sales			447,000	192,000	690,000	292,000
	Variable expense			259,260	132,480	103,500	75,920
	Fixed expense			113,000	59,000	471,000	224,000
	Net operating income(loss)			74,740	520	115,500	-7,920
	Average contribution margin ratio			42%	31%	85%	74%
		contribution margin ratio= contribution /sales
		sales = 100%
		Variable + contribution % = 100% sales
		hence when contribution is 41% , variable expense ratio will be 59% of sales