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 1 Case 2 Case 3 Case 4 Sales revenue $100,000 $80,000 $Answer $Answer Contribution margin $40,000} $Answer $30,000 $Answer Fixed Costs $27,000 $Answer $Answer $Answer Net income $Answer $4,000 $6,000 $Answer Variable cost ratio Answer 0.50 Answer 0.20 Contribution margin ratio Answer Answer 0.40 Answer Break-even point (dollars) $Answer $Answer $Answer $30,000 Margin of safety (dollars) $Answer $Answer $Answer $30,000

Explanation / Answer

Solution:

Case 1

Case 2

Case 3

Case 4

Sales revenue

$100,000

$80,000

75000

$60,000

Contribution margin

$40,000

$40,000

$30,000

48000

Fixed Costs

$27,000

$36,000

$24,000

24000

Net income

$13,000

(Contribution 40,000 - Fixed Cost 27,000)

$4,000

$6,000

24000

Variable cost ratio (Sales 1 - Contribution Margin Ratio)

0.60

(1 – Contribution Margin Ratio 0.40)

0.5

0.6

0.2

Contribution margin ratio (Contribution Margin / Sales)

0.40

(Contribution Margin 40,000 / Sales 100,000)

0.5

0.4

0.8

Break-even point (dollars) (Fixed Cost / Contribution Margin Ratio)

$67,500

(Fixed Cost 27,000 / Contribution Margin Ratio 0.40)

72000

60000

$30,000

Margin of safety (dollars) (Total Sales - Break Even Sales)

$32,500

(Total Sales 100,000 – 67,500 Break Even Sales)

$8,000

$15,000

$30,000

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Case 1

Case 2

Case 3

Case 4

Sales revenue

$100,000

$80,000

75000

$60,000

Contribution margin

$40,000

$40,000

$30,000

48000

Fixed Costs

$27,000

$36,000

$24,000

24000

Net income

$13,000

(Contribution 40,000 - Fixed Cost 27,000)

$4,000

$6,000

24000

Variable cost ratio (Sales 1 - Contribution Margin Ratio)

0.60

(1 – Contribution Margin Ratio 0.40)

0.5

0.6

0.2

Contribution margin ratio (Contribution Margin / Sales)

0.40

(Contribution Margin 40,000 / Sales 100,000)

0.5

0.4

0.8

Break-even point (dollars) (Fixed Cost / Contribution Margin Ratio)

$67,500

(Fixed Cost 27,000 / Contribution Margin Ratio 0.40)

72000

60000

$30,000

Margin of safety (dollars) (Total Sales - Break Even Sales)

$32,500

(Total Sales 100,000 – 67,500 Break Even Sales)

$8,000

$15,000

$30,000

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