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.)

a. 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 19,500 4,900 Sales $226,800 $397,300 $151,900 Variable expenses 113,400 253,500 Fixed expenses 81,000 166,000 91,000 Net operating income (loss) $94,300 $137,500 $(27,300) Contribution margin per unit $19 $11

b. Assume that more than one product is being sold in each of the four following case situations:

	Case #1 Case #2 Case #3 Case #4 Sales $441,000 $203,000 $301,000 Variable expenses 140,070 84,280 Fixed expenses 57,000 473,000 Net operating income (loss) $74,220 $109,660 $(12,280) Contribution margin ratio (percent) 42% 83%

Answer 1

a.

Case #1 Case #2 Case #3 Case #4 Unit sold 8,100 13700 (397300-137000)/19 19,500 4,900 Sales $226,800 $397,300 468000(19500*(11+(253500/19500)) $151,900 Variable expenses 113,400 137000 (397300-166000-94300) 253,500 88200 (151900-91000+27300) Fixed expenses 81,000 166,000 77000 (468000-253500-137500) 91,000 Net operating income (loss) 32400 (226800-113400-81000) $94,300 $137,500 $(27,300) Contribution margin per unit 14.00 (226800-113400)/8100 $19 $11 In case 4 contribution margin Per unit = (151900-88200)/4900 = 13

b.

Case #1 Case #2 Case #3 Case #4 Sales $441,000 $203,000 702000(473000+109660)*100/83 $301,000 Variable expenses 255780 (441000*(100%-42%)) 140,070 119340 (702000*(100%-83%)) 84,280 Fixed expenses 111000(441000-255780-74220) 57,000 473,000 229000 (301000-84280+12280) Net operating income (loss) $74,220 5930 (203000-140070-57000) $109,660 $(12,280) Contribution margin ratio (percent) 42% 31% (203000-140070)/203000 83% 72% (301000-84280) / 301000