Question 3 (of3) 3 3.00 points Calculate the missing amounts for each of the fol

Question

Question 3 (of3) 3 3.00 points Calculate the missing amounts for each of the following firms. (Do not round intermediate calculations. Round "Selling Price" and "Variable Costs Per Unit" to 2 decimal places.) Units Sold Selling Costs Perntribuion Fixed Costs Operating Unit 11.400 24 00 S 113.100 40,800 Firm B 8.800 18.00 3. 49.00 28204 88,700 32.700 8.20 10,700 (5,270) Fim D 4.800 40.390 Learning Objecives 12-07 Explain and illustrate the difterence between the traditional income stalement forrmal and the contbudion inargin income statement format Learming Objecive. 12-09 Calculate the contribudion margin ralio and explain how i can be used in CVP analysis Difficulty: 3 Hard

Explanation / Answer

Firm A:

Contribution Margin = (Selling Price - Variable Costs per unit) * Units Sold
$113,100 = ($24.00 - Variable Costs per unit) * 11,400
$9.92 = $24.00 - Variable Costs per unit
Variable Costs per unit = $14.08

Operating Income (loss) = Contribution Margin - Fixed Costs
Operating Income (loss) = $113,100 - $40,800
Operating Income (loss) = $72,300

Firm B:

Operating Income (loss) = Contribution Margin - Fixed Costs
$32,700 = Contribution Margin - $66,700
Contribution Margin = $99,400

Contribution Margin = (Selling Price - Variable Costs per unit) * Units Sold
$99,400 = (Selling Price - $18.00) * 8,900
$11.17 = Selling Price - $18.00
Selling Price = $29.17

Firm C:

Contribution Margin = (Selling Price - Variable Costs per unit) * Units Sold
$10,700 = ($8.20 - $3.70) * Units Sold
$10,700 = $4.50 * Units Sold
Units Sold = 2,378

Operating Income (loss) = Contribution Margin - Fixed Costs
-$5,270 = $10,700 - Fixed Costs
Fixed Costs = $15,970

Firm D:

Contribution Margin = (Selling Price - Variable Costs per unit) * Units Sold
$42,820 = (Selling Price - $49.00) * 4,890
$8.76 = Selling Price - $49.00
Selling Price = $57.76

Operating Income (loss) = Contribution Margin - Fixed Costs
Operating Income (loss) = $42,820 - $49,390
Operating Income (loss) = -$6,570

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