Question

Problem: Consider each of the following situations independently. Fill in the blanks with the appropriate information.

1.

selling price per unit	Variable cost percentage	number of units sold	total contribution margin	Total fixed costs	Net Income (Loss)
$90.00		20,000		$750,000	($30,000)

2.

Number of Units sold	Total Variable Cost	Variable Cost percentage	Total Contribution Margin	Total Fixed Costs	Net Income (Loss)
1,800		30%	$756,000		$54,000

3.

Selling Price per unit	Total Sales	Number of Units Sold	Variable Cost per unit	Contribution Margin percentage	Total Fixed costs	Net Income	Return on Sales (NI/Sales)
$20.00				57%		$80,000	8%

4.

Total Variable Cost	Selling Price per unit	Number of units sold	Contribution Margin Percentage	Total Fixed Costs	Net Income (loss)
$1,041,250		17,500		$150,000	$33,750

Answer 1

1. Contribution Margin = Fixed cost-Profit = 750000-(-30000) =780000

Variable cost = Selling Price-Contribution = (90*20000)-780000 = 1800000-78000 = 1020000

Variable cost Percentage = Variable Cost/Sales = 1020000/1800000 = 0.566667 or 56.667%

2. Contribution percentage = 100%-30% =70%

Total Sales = Contribution*100/70 = 756000*100/70 = 1080000

Fixed Cost = Contribution-Profit = 1080000-(-54000) = 1134000

3. Total Sales = Net Income/ Return = 80000/0.08 = 1000000

Number of units sold = 1000000/20 = 50000

Variable Cost = Sales*(100-Contribution margin percentage)

= 1000000*(100%-57%) = 430000

Variable cost per unit = 430000/50000 = 8.6

Contibution = Sales*Contribution margin = 1000000*57% = 570000

Total fixed Costs = Contribution-Net income =570000-80000 =490000

4. Contribution = Total Fixed costs+Net loss =150000+33750 = 183750

Sales = Contribution + Variable Costs = 183750+1041250 = 1225000

Selling Price per unit = Sales/No. of units sold = 1225000/17500 = 70

Contribution Margin Percentage = Contribution/Sales = 183750/1225000 = 0.15 or 15%