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.)

Complete this question by entering your answers in the tabs below.

• Required A
• Required B

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

	Case #1 Case #2 Case #3 Case #4 Unit sold 8,100 20,200 5,900 Sales $243,000 $423,400 $200,600 Variable expenses 145,800 181,800 Fixed expenses 91,000 167,000 87,000 Net operating income (loss) $66,600 $196,800 $25,100 Contribution margin per unit $16 $14

Answer 1

Before answering given problem, we have to understand the accounting equation.

Sales - Variable expenses = Contribution Margin

Contribution Margin - Fixed expenses = Net operating income

Contribution margin / Number of units = Contribution margin per unit

	Case #1	Case #2	Case #3	Case #4
Unit sold	8,100	($423,400-$189,800)/$16 = 14,600	20,200	5,900
Sales	$                                                         243,000	$                                                              423,400	(20,200*$14)+$181,800 = $464,600	$                                                         200,600
Less: Variable expenses	$                                                         145,800	$423,400-$167,000-$66,600 = $189,800	$                                                              181,800	$200,600-$87,000-$25,100 = $88,500
Less: Fixed expenses	$                                                            91,000	$                                                              167,000	$464,600-$181,800-$196,800 = $86,000	$                                                            87,000
Net operating income (loss)	$243,000-$145,800-$91,000 = $6,200	$                                                                66,600	$                                                              196,800	$                                                            25,100
Contribution margin per unit	($243,000-$145,800)/8,100 = $12	$                                                                         16	$                                                                         14	($200,600-$88,500)/5,900 = $19

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