a. Using contribution margin per unit: (Omit the \"$\" sign in your response) Sa
ID: 2378471 • Letter: A
Question
a. Using contribution margin per unit: (Omit the "$" sign in your response)Sales Variable Costs Contribution
Margin per Unit Fixed Costs Operating Income Units Sold (1) $ $ 120,000 $ 20 $ $ 25,000 4,000 (2) 180,000 45,000 30,000 5,000 (3) 600,000 30 150,000 90,000
b. Using the contribution margin ratio: (Omit the "$" and "%" signs in your response)
Sales Variable Costs
Contribution
Margin Ratio (%) Fixed Costs Operating Income (1) $ 900,000 $ 720,000 % $ $ 95,000 (2) 600,000 40 % 75,000 (3) 30 % 90,000 60,000 a. Using contribution margin per unit: (Omit the "$" sign in your response)
Explanation / Answer
Solving these missing figures will require some simple algebra. I've detailed the solutions below:
a.) Formulas to know:
Sales - Variable Costs - Fixed Costs = Operating Income
Sales - Variable Costs = Contribution Margin
1.) Contribution Margin = $20 x 4,000 units = $80,000
Sales = Variable Costs + Contribution Margin = $120,000 + $80,000 = $200,000
Fixed Costs = Sales - Variable Costs - Operating Income = $200,000 - $120,000 - $25,000 = $55,000
2.) Variable Costs = Sales - Fixed Costs - Operating Income = $180,000 - $45,000 - $30,000 = $105,000
Contribution Margin per unit = (Sales - Variable Costs)/Units Sold = ($180,000 - $105,000)/5,000 units = $15/unit
3.) Variable Costs = Sales - Fixed Costs - Operating Income = $600,000 - $150,000 - $90,000 = $360,000
Units Sold = (Sales - Variable Costs)/Contribution Margin per unit = ($600,000 - $150,000)/$30 = 15,000 units
b.)
1.) Contribution Margin = Sales - Variable Costs = $900,000 - $720,000 = $180,000
Contribution Margin Ratio = Contribution Margin/Sales = $180,000/$900,000 = 20%
Fixed Costs = Sales - Variable Costs - Operating Income = $900,000 - $720,000 - $95,000 = $85,000
2.) Contribution Margin = Contribution Margin Ratio x Sales = 40% x $600,000 = $240,000
Variable Costs = Sales - Contribution Margin = $600,000 - $240,000 = $360,000
Fixed Costs = Sales - Variable Costs - Operating Income = $600,000 - $360,000 - $75,000 = $165,000
3.) Contribution Margin = Fixed Costs + Operating Income = $90,000 + $60,000 = $150,000
Sales = Contribution Margin/Contribution Margin Ratio = $150,000/.30 = $500,000
Variable Costs = Sales - Contribution Margin = $500,000 - $150,000 = $350,000
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