Question

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:

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 8,800 19,100 4,900 Sales $246,400 $352,500 $439,200 $137,200 Variable expenses 158,400 210,100 Fixed expenses 85,000 174,000 83,000 78,000 Net operating income (loss) $3,000 $23,400 $146,200 $(33,900) Contribution margin per unit $10 $14 $12

• Required A

Case #1 Case #2 Case #3 Case #4 Sales $443,000 $206,000 $305,000 Variable expenses 138,020 103,700 Fixed expenses 62,000 472,000 Net operating income (loss) $82,350 $106,920 $(30,700) Contribution margin ratio (percent) 45 % % 82 % %

• Required A

Answer 1

a)				Case#1	Case#2	Case#3	Case#4
	Unit sold			8,800	14,100	19,100	4,900
	Sales			246,400	352,500	439,300	137,200
	Variable expense			158,400	155,100	210,100	93,100
	Fixed expense			85,000	174,000	83,000	78,000
	Net operating income(loss)			3,000	23,400	146,200	-33,900
	contribution margin per unit			10	14	12	9
		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			443,000	206,000	706,000	305,000
	Variable expense			243,650	138,020	127,080	103,700
	Fixed expense			117,000	62,000	472,000	232,000
	Net operating income(loss)			82,350	5,980	106,920	-30,700
	Average contribution margin ratio			45%	33%	82%	66%
		contribution margin ratio= contribution /sales
		sales = 100%
		Variable + contribution % = 100% sales
		hence when contribution is 41% , variable expense ratio will be 59% of sales