Cost-Volume-Profit Relations: Missing Data Following are data from 4 separate co

Question

Cost-Volume-Profit Relations: Missing Data
Following are data from 4 separate companies. Supply the missing data in each independent case

Case A Case B Case C Case D Unit Sales 1,000 800 Answer Answer Sales revenue $20,000 $Answer $Answer $60,000 Variable cost per unit $10 $2 $14 $Answer Contribution margin $Answer $800 $Answer $Answer Fixed Costs $8,300 $Answer $100,000 $Answer Net income $Answer $600 $Answer $Answer Unit contribution margin $Answer $Answer $Answer $12 Break-even point (units) Answer Answer 4,000 2,000 Margin of safety (units) Answer Answer 200 1,000

Explanation / Answer

Answer: Case A:-

Contribution margin =Sales – Variable cost

                                  =$20000 – (1000 units*$10 per unit)

                                  =$20000-$10000 =$10000

Net income =Contribution margin – Fixed cost

                   =$10000-$8300 =$1700

Unit contribution margin =Selling price per unit- Variable cost per unit

                                         =($20000/1000 units)-$10 per unit

                                         =$20 per unit-$10 per unit =$10 per unit

Break even point (Units) =Fixed cost/Contribution margin per unit     

                                        =$8300/$10 per unit =830 units

Margin of safety (units) =Total sales- BEP sales

                                        =1000-830 = 170 units

Case B:-

Net Income = Contribution margin – Fixed cost

   $600      =$800 – Fixed cost

Fixed cost =$800-$600 =$200

Let selling price per unit = X

Contribution margin =Sales – Variable cost

$800 = 800*X-800*$2 per unit

$800 =800x-$1600

X =1600+800/800 =$3 per unit

Sales revenue =800 units*$3 per unit =$2400

Unit contribution margin =Selling price per unit- Variable cost per unit

                           =$3 per unt-$2 per unit =$1 per unit

Break even point (Units) =Fixed cost/Contribution margin per unit

                                       =$200/$1 per unit =200 units

Margin of safety (units) =Total sales- BEP sales

                                        =800 units-200 units =600 units

Case C:-

Break even point (Units) =Fixed cost/Contribution margin per unit

       4000 units = $100000/ Contribution margin per unit

Contribution margin per unit=$100000/4000 units =25 per unit

Margin of safety (units) =Total sales- BEP sales

     200 units =Total sales – 4000 units

Total sales =4000+200= 4200 units

Contribution margin =$25 per unit*4200 units= $105000

Unit contribution margin =Selling price per unit- Variable cost per unit

          $25 per unit =Selling price per unit - $14 per unit

Selling price per unit=$25 + $14 = $39 per unit

Sales revenue =4200 units*$39 per unit =$163800

Net Income= Contribution margin-Fixed cost

                   =$105000-$100000 =$5000

Case D:-

Total sales (units)= Margin of safety sales + BEP sales

                             =1000+2000 = 3000 units

Contribution margin =$12 per unit*3000 units =$36000

Variable cost =$60000-36000 =$24000

Break even point (Units) =Fixed cost/Contribution margin per unit

      2000 units=Fixed cost/$12 per unit

Fixed cost =2000 units*$12 per unit =$24000

Variable cost per unit =$24000/3000 units =$8 per unit

Net income =$36000-$24000 =$12000

  

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