Question

Fill in the blanks for each of the following independent cases.

		Variable	Fixed	Total	Operating	Contribution
Case	Revenues	Costs	Costs	Costs	Income	Margin Percentage
a.		$800		$1,000	$1,600
b.	$2,200		$200		$300
c.	$600	$400		$600
d.	$1,200		$200			25	%

Answer 1

Answer:

Case a

Total Costs = Total Variable Costs + Total Fixed Costs
$1,000 = $800 + Total Fixed Costs
Total Fixed Costs = $200

Operating Income = Revenues – Total Costs
$1,600 = Revenues - $1,000
Revenues = $2,600

Contribution Margin = Revenue – Variable Costs
Contribution Margin = $2,600 – $800 = $1,800

Contribution Margin Percentage = Contribution Margin / Revenue * 100
Contribution Margin Percentage = $1,800 / $2,600 * 100
Contribution Margin Percentage = 69.23%

Case b

Operating Income = Revenues – Total Costs
$300 = $2,200 – Total Costs
Total Costs = $1,900

Total Costs = Total Variable Costs + Total Fixed Costs
$1,900 = Total Variable Costs + $200
Total Variable Costs = $1,700

Contribution Margin = Revenue – Variable Costs
Contribution Margin = $2,200 – $1,700 = $500

Contribution Margin Percentage = Contribution Margin / Revenue * 100
Contribution Margin Percentage = $500 / $2,200 * 100
Contribution Margin Percentage = 22.73%

Case c

Total Costs = Total Variable Costs + Total Fixed Costs
$600 = $400 + Total Fixed Costs
Total Fixed Costs = $200

Operating Income = Revenues – Total Costs
Operating Income = $600 - $600
Operating Income = $0

Contribution Margin = Revenue – Variable Costs
Contribution Margin = $600 – $400 = $200

Contribution Margin Percentage = Contribution Margin / Revenue * 100
Contribution Margin Percentage = $200 / $600 * 100
Contribution Margin Percentage = 33.33%

Case d

Contribution Margin Percentage = Contribution Margin / Revenue * 100
25 = Contribution Margin / $1,200 * 100
Contribution Margin = $300

Contribution Margin = Revenue – Variable Costs
$300 = $1,200 - Variable Costs
Variable Costs = $900

Total Costs = Total Variable Costs + Total Fixed Costs
Total Costs = $900 + $200
Total Costs = $1,100

Operating Income = Revenues – Total Costs
Operating Income = $1,200 - $1,100
Operating Income = $10