Homework Answers
Case 1
| Particulars | Amount |
| Sales | |
| Variable cost | (140000 ) |
| Contribution | 210000 |
| Fixed cost | (60000) |
| Net Income | 150000 |
Calculation of sales
Sales - Variable cost = Contribution
Sales - 140000 = 210000
Sales = 210000 + 140000
Sales = 350000
Contribution Margin = Contribution / Sales
Contribution Margin = 210000 / 350000
Contribution Margin = 60%
Break even sales = Fixed cost / Contribution Margin
Break even sales = 60000 / 0.60
Break even sales = 100000
Case 2
| Particulars | Amount |
| Sales | 95000 |
| Variable cost | (19000 ) |
| Contribution | |
| Fixed cost | |
| Net Income | 41000 |
Calculation of Contribution
Sales - Variable cost = Contribution
95000 - 19000 =76000
Calculation of Fixed Cost
Contribution - fixed cost = Net Income
76000 -fixed cost = 41000
76000 -41000 =fixed cost
35000 = fixed cost
Contribution Margin = Contribution / Sales
Contribution Margin = 76000 / 95000
Contribution Margin = 80%
Break even sales = Fixed cost / Contribution Margin
Break even sales = 35000 / 0.80
Break even sales = 43750
Case 3
| Particulars | Amount |
| Sales | |
| Variable cost | (80000 ) |
| Contribution | |
| Fixed cost | (60000) |
| Net Income |
Break even sales = Fixed cost / Contribution Margin
80000 = 60000 / Contribution Margin
80000 x Contribution Margin = 60000
Contribution Margin = 60000 / 80000
Contribution Margin =75%
so variable cost = 25 % ( 100 - 75)
Calculation of sales
Sales x variable % = Variable cost
Sales x 0.25 = 80000
Sales =80000 / 0.25
Sales =32000
Sales - variable cost = contribution
320000 - 80000 = contribution
240000= contribution
Contribution - fixed cost = net income
240000 - 60000 =net income
180000= net income
Case 4
| Particulars | Amount |
| Sales | 160000 |
| Variable cost | |
| Contribution | 30000 |
| Fixed cost | |
| Net Income |
Contribution Margin = 30000 / 160000
Contribution Margin =18.75%
Break even sales = Fixed cost / Contribution Margin
160000 = Fixed cost/ 0.1875
160000 x 0.1875 = Fixed cost
30000 = Fixed cost
Sales - variable = Contribution
160000 -variable = 30000
160000 - 30000 = Contribution
130000 = Contribution
Contribution - fixed cost = net income
30000 - 30000 =net income
0= net income
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1)Contribution margin (CM)ratio and variable expense ratio.
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method.
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change in the cost behavior patterns, how much will the company’s
net operating increase by using the Contribution Margin
(RM)Ratio.
4)Based on the original data, if the company wants to earns a
minimum profit of RM300,000, HOW many units will have to be sold to
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