Question

Contribution Margin, Unit Amounts, Break-Even Units

Information on four independent companies follows. Calculate the correct amount for each answer blank.

Unless otherwise instructed, round all total dollar figures (e.g., sales, total contribution margin) to the nearest dollar, breakeven or target units to the nearest unit, and unit costs and unit contribution margins to the nearest cent. Round ratios to four significant digits. Use the minus sign to indicate an operating loss.

			Laertes			Ophelia			Fortinbras			Claudius
Sales			$15,000			$			$			$10,600
Total variable cost			$5,000			$11,700			$9,750			$
	Total contribution margin		$10,000			$3,900			$			$
Total fixed cost			$			$4,000			$			$4,452
	Operating income (loss)		$500			$			$364			$848
Units sold				units		1,300	units		125	units		1,000	units
Price per unit			$5.00			$			$130.00			$
Variable cost per unit			$			$9.00			$			$
Contribution margin per unit			$			$3.00			$			$
Contribution margin ratio				%			%		40%				%
Break-even units				units			units			units			units

Answer 1

	Laertes	Ophelia	Fortinbras	Claudius
Sales	15,000	15,600	16,250	10,600
Total Variable Cost	5,000	11,700	9,750	5,300
Total Contribution Margin	10,000	3,900	6,500	5,300
Total Fixed Cost	9,500	4,000	6,136	4,452
Operating Income (Loss)	500	(100)	364	848
Units Sold	3,000	1,300	125	1,000
Price per Unit	5.00	12.00	130.00	10.60
Variable Cost per unit	1.67	9.00	78.00	5.30
Contribution Margin per unit	3.33	3.00	52.00	5.30
Contribution Margin Ratio	66.67	25.00	40.00	50.00
Break Even Units	2,850	1,333	118	840

Contribution Margin = Sales - Variable Expense

Profit = Contribution Margin - Fixed Expense

Price per unit = Sale / Units sold

Units sold = Sales / Price per unit

Variable cost per unit = Total Variable cost / Unit sold

Contribution Margin per unit = Contribution margin / Units sold

Contribution margin ratio = Contribution Margin x 100 / Sale per unit

Break even in units = Fixed cost / Selling Price - Variable price