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.)

Required A

	Case #1	Case #2	Case #3	Case #4
Units Sold	8,500		20,900	4,600
Sales	$ 238,000	$ 369,600		$ 124,200
Variable expenses	144,500		167,200
Fixed expenses	99,000	175,000		82,000
Net Operating Income (loss)		$ 62,600	$177,700	$ (45,200)
Contribution margin per unit		$ 18	$ 13

Required B:

	Case #1		Case #2		Case #3		Case #4
Sales	$459,000		$198,000				$305,000
Variable expenses			134,640				88,450
Fixed expenses			55,000		467,000
Net operating income (loss)	$ 72,600				$93,000		$ (9,450)
Contribution margin ratio (percent)	40	%		%	80	%		%

Answer 1

Required A:

Particulars	Case 1	Case 2	Case 3	Case 4
Units sold	8500	13200	20900	4600
Sales	$238000	$369600	$459800	$124200
Variable expenses	$144500	$132000	$167200	$87400
Fixed expenses	$99000	$175000	$114900	$82000
Net operating income	($5500)	$62600	$177700	($45200)
Contribution margin per unit	$11	$18	$13	$8

Contribution margin per unit = (Sales - variable expenses) / Units sold

Fixed expense = Contribution - net operating income

Required B:

Particulars	Case 1	Case 2	Case 3	Case 4
Sales	$459000	$198000	$700000	$305000
Variable expenses	$275400	$134640	$140000	$88450
Fixed expenses	$111000	$55000	$467000	$226000
Net operating income	$72600	$8360	$93000	($9450)
Contribution margin ratio	40%	32%	80%	71%

Contribution ratio = Contribution margin / sales.