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:

Part 1
	Case #1 Case #2 Case #3 Case #4 Unit sold 15,000 10,000 6,000 Sales $180,000 $100,000 $300,000 Variable expenses 120,000 70,000 Fixed expenses 50,000 32,000 100,000 Net operating income (loss) $8,000 $12,000 $(10,000) Contribution margin per unit $10 $13

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Part 2
	Case #1 Case #2 Case #3 Case #4 Sales $500,000 $400,000 $600,000 Variable expenses 260,000 420,000 Fixed expenses 100,000 130,000 Net operating income (loss) $7,000 $20,000 $(5,000) Contribution margin ratio (percent) 20 % % 60 % %

Answer 1

Answer

--Part 1

	Case #1	Case #2	Case #3	Case #4
Unit sold	15,000	4,000	10,000	6,000
Sales	$180,000	$100,000	$200,000	$300,000
Variable expenses	$120,000	$60,000	$70,000	$210,000
Fixed expenses	$50,000	$32,000	$118,000	$100,000
Net operating income (loss)	$10,000	$8,000	$12,000	($10,000)
Contribution margin per unit	$4	$10	$13	$15

--Working for Part 1

	Case #1	Case #2	Case #3	Case #4
Unit sold	15000	=+(100000-60000)/10	10000	6000
Sales	180000	100000	=70000+118000+12000	300000
Variable expenses	120000	=100000-32000-8000	70000	=+(300000-100000+10000)
Fixed expenses	50000	32000	=+(10000*13)-12000	100000
Net operating income (loss)	=180000-120000-50000	8000	12000	-10000
Contribution margin per unit	=+(180000-120000)/15000	10	13	=+(300000-210000)/6000

--Part 2

	Case #1	Case #2	Case #3	Case #4
Sales	$500,000	$400,000	$250,000	$600,000
Variable expenses	$400,000	$260,000	$100,000	$420,000
Fixed expenses	$93,000	$100,000	$130,000	$185,000
Net operating income (loss)	$7,000	$40,000	$20,000	($5,000)
Contribution margin ratio (percent)	20%	35%	60%	30%

--Working for Part 2

	Case #1	Case #2	Case #3	Case #4
Sales	500000	400000	=+(130000+20000)/60%	600000
Variable expenses	=500000*80%	260000	=250000*40%	420000
Fixed expenses	=500000-400000-7000	100000	130000	=600000-420000+5000
Net operating income (loss)	7000	=400000-260000-100000	20000	-5000
Contribution margin ratio (percent)	0.2	=+(400000-260000)/400000	0.6	=+(600000-420000)/600000