Concept explainers
Missing Data; Basic CVP Concepts L06−1, L06−9
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.)
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:
Cost volume profit analysis: Cost volume profit analysis measures the effect on income of a company with the alteration of cost and volume of sales.
The missing amount in the table.
Answer to Problem 11E
Solution:
a) Assuming that only one product is being sold in each of the following case situations:
Case | Units Sold | Sales | Variable
Expenses | Contribution
Margin per Unit | Fixed Expenses | Net Operating Income(loss) |
1 | 15,000 | $180,000 | $120,000 | $4 | $50,000 | $10,000 |
2 | 4,000 | $100,000 | $60,000 | $10 | $32,000 | $8,000 |
3 | 10,000 | $200,000 | $70,000 | $13 | $118,000 | $12,000 |
4 | 6,000 | $300,000 | $210,000 | $15 | $100,000 | ($10,000) |
Case 1
Contribution format income statement | ||
Total | Per Unit | |
Sales (15,000 units) | $180,000 | $12.00 |
Variable expenses | $120,000 | $8.00 |
Contribution Margin | $60,000 | $4.00 |
Fixed expenses | $50,000 | |
Net operating income | $10,000 |
Case 2
Contribution format income statement | ||
Total | Per Unit | |
Sales (4,000 units) | $100,000 | $25.00 |
Variable expenses | $60,000 | $15.00 |
Contribution Margin | $40,000 | $10.00 |
Fixed expenses | $32,000 | |
Net operating income | $8,000 |
Case 3
Contribution format income statement | ||
Total | Per Unit | |
Sales (10,000 units) | $200,000 | $20.00 |
Variable expenses | $70,000 | $7.00 |
Contribution Margin | $130,000 | $13.00 |
Fixed expenses | $118,000 | |
Net operating income | $12,000 |
Case 4
Contribution format income statement | ||
Total | Per Unit | |
Sales (6,000 units) | $300,000 | $50.00 |
Variable expenses | $210,000 | $35.00 |
Contribution Margin | $90,000 | $15.00 |
Fixed expenses | $100,000 | |
Net operating income | ($10,000) |
b) Assuming that more than one product is being sold in each of the four case situations:
Case | Sales | Variable Expenses | Average
Contribution Margin Ratio | Fixed
Expenses | Net Operating
Income (loss) |
1 | $500,000 | $400,000 | 20% | $93,000 | $7,000 |
2 | $400,000 | $260,000 | 35% | $100,000 | $40,000 |
3 | $250,000 | $100,000 | 60% | $130,000 | $20,000 |
4 | $600,000 | $420,000 | 30% | $185,000 | ($5,000) |
Case 1
Contribution format income statement | |
Amounts | |
Sales | $500,000 |
Variable expenses | $400,000 |
Contribution Margin | $100,000 |
Fixed expenses | $93,000 |
Net operating income | $7,000 |
Contribution format income statement | |
Amounts | |
Sales | $400,000 |
Variable expenses | $260,000 |
Contribution Margin | $140,000 |
Fixed expenses | $100,000 |
Net operating income | $40,000 |
Case 3
Contribution format income statement | |
Amounts | |
Sales | $250,000 |
Variable expenses | $100,000 |
Contribution Margin | $150,000 |
Fixed expenses | $130,000 |
Net operating income | $20,000 |
Case 4
Contribution format income statement | |
Amounts | |
Sales | $600,000 |
Variable expenses | $420,000 |
Contribution Margin | $180,000 |
Fixed expenses | $185,000 |
Net operating income | ($5,000) |
Explanation of Solution
A contribution margin is calculated by deducting the variable expenses from the sales revenue. So, if the variable expense is missing, the contribution margin is deducted from the sales revenue and goes same in case of units. The net operating income is calculated by deducting the fixed expenses from the contribution margin. So, if the fixed expenses are missing, the operating income is deducted from the contribution margin. The contribution margin ratio is calculated by dividing the contribution margin by sales revenue. So, if the sales revenue is missing, it can be ascertained by dividing the contribution margin by the contribution margin ratio and if the contribution margin is missing, it is calculated by multiplying the contribution margin with the contribution margin ratio.
Given: a) Assume that only one product is being sold in each of the following case situations:
Case | Units Sold | Sales | Variable
Expenses | Contribution
Margin per Unit | Fixed Expenses | Net Operating Income(loss) |
1 | 15,000 | $180,000 | $120,000 | ? | $50,000 | ? |
2 | ? | $100,000 | ? | $10 | $32,000 | $8,000 |
3 | 10,000 | ? | $70,000 | $13 | ? | $12,000 |
4 | 6,000 | $300,000 | ? | ? | $100,000 | ($10,000) |
b) Assume that more than one product is being sold in each of the four case situations:
Case | Sales | Variable Expenses | Average
Contribution Margin Ratio | Fixed
Expenses | Net Operating
Income (loss) |
1 | $500,000 | ? | 20% | ? | $7,000 |
2 | $400,000 | $260,000 | ? | $100,000 | ? |
3 | ? | ? | 60% | $130,000 | $20,000 |
4 | $600,000 | $420,000 | ? | ? | ($5,000) |
The cost volume profit analysis aims determining an outcome of changes in the various variables of operations. A cost is the expenses incurred on the products which are being sold and the volume is the quantity of the products which is going to be sold. The profit is the difference between the cost incurred and sales revenue of a company. An analysis of cost volume profit helps in predicting or forecasting the various consequences of various decisions.
Want to see more full solutions like this?
Chapter 6 Solutions
Loose Leaf For Introduction To Managerial Accounting
Additional Business Textbook Solutions
Fundamentals Of Cost Accounting (6th Edition)
Financial Accounting
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Auditing And Assurance Services
Horngren's Accounting (11th Edition)
- 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: Complete this question by entering your answers in the tabs belows Required A Required B Assume that only one product is being sold in each of the four following case situations: (Loss amounts should be indicated by a minus sign.) Case #1 Case #2 Case #3 Case #4 Unit sold 8,900 20,100 5,300 Sales $267,000 $319,000 $148,400 Variable expenses 124,600 221,100 Fixed expenses 85,000 179,000 76,000 Net operating income (loss)…arrow_forwardFill in the missing amounts in each of the following eight case situations. Treat each case independently. (Hint: One way to find the missing amounts would be to prepare a contribution margin income statement for each case, enter the known data, and then compute the missing items.) a. Assume that only one product is being sold in each of the following four case situations: (Negatlve omounts should be Indicated by a mlnus sign. Enter your contributlon margln answers as per unlt dollor values. Enter your answers rounded to the nearest whole number.) Fixed Еxpenses Net Income (Loss) Variable Contribution Case Units Sold Sales Expenses Margin 14,000 196,000 $9 per unit 46.000 1 106,600 $16 per unit 40% 31,500 59,400 15 10,000 3. 9,900 282,000 $31 per unit 104,000 (8,000) 4 b. Assume that more than one product is being sold in each of the following four case situations: (Negative omounts should be Indicated by a mlnus sign.) Average Contribution Margin (percentage) Variable Fixed Net Income…arrow_forwardFill 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.)a. Assume that only one product is being sold in each of the four following case situations:Contribution Net OperatingUnits Variable Margin Fixed IncomeCase Sold Sales Expenses per Unit Expenses (Loss)1 .......... 15,000 $180,000 $120,000 ? $50,000 ?2 .......... ? $100,000 ? $10 $32,000 $8,0003 .......... 10,000 ? $70,000 $13 ? $12,0004 .......... 6,000 $300,000 ? ? $100,000 $(10,000)arrow_forward
- Fill in the missing amounts in each of the eight cases 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: Complete this question by entering your answers in the tabs below. Required A Required B Assume that more than one product is being sold in each of the four following case situations: Sales Variable expenses Fixed expenses Net operating income (loss) Contribution margin ratio (percent) $ $ Case 1 442,000 75,060 43 % $ Case 2 198,000 132,660 68,000 % $ Case 3 470,000 82,210 79 % $ Case 4 304,000 94,240 $ (19,240) %arrow_forwardFill 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 following four case situations: Unit sold Sales Variable expenses Fixed expenses Operating income (loss) Contribution margin per unit Sales Variable expenses Fixed expenses $ Operating income (loss) Average contribution margin (percentage) Case #1 20,100 241,200 $ 160,800 67,000 $ Case #2 S $ $ Case #1 134,000 42,880 10,720 S 10 S 8,700 20% b. Assume that more than one product is being sold in each of the following four case situations. (Enter "Contribution margin ratio" in percent. Round your final answers to the nearest whole dollar amount.) 534,000 $ Case #3 Case #2 13,400 434,000 282,100 108,500 93,800 Case #4 8,040 S 402,000…arrow_forwardFill 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 following four case situations: Unit sold Sales Variable expenses Fixed expenses Operating income (loss) Contribution margin per unit Sales Variable expenses Fixed expenses $ Operating income (loss) Average contribution margin (percentage) Case #1 20,400 244,800 163,200 68,000 $ $ 136,000 $ 10 Case #2 $ Case #1 536,000 43,520 10.880 $ 8,800 20% 10 $ 69 Case #3 Case #2 13,600 b. Assume that more than one product is being sold in each of the following four case situations: (Enter "Contribution margin ratio" in percent. Round your final answers to the nearest whole dollar amount.) 436.000 283.400 109.000 95,200 16,320 13 $ S CA Case #4…arrow_forward
- Direction: Read carefully and answer the questions below. Encircle the letter of the correct answer. 1. Which of the following is an example of a variable cost? а. interest b. ingredients с. insurance d. lease 2. What type of cost varies depending on the quantity of products being produced? а. fixed b. net sales с. total d. variable 3. Which among the following concepts is usually seen on the top item in an income statement from which all costs and expenses is subtracted to arrive at net income? a. fixed cost b. net sales с. total cost d. variable cost 4. When do we obtain the break-even point? When the fixed cost is equal to the total cost When the total cost is equal to the variable cost When the variable cost is equal to the fixed cost d. When the number of units of goods sold covers the all the costs а. b. с. 5. Which of the following is NOT true? а. The fixed cost does not vary over time. b. The total cost is the sum of the fixed cost and the variable cost. с. The total cost is…arrow_forwardThe line that begins at the origin on a CVP graph represents total expenses. total fixed expenses. total sales revenues. both the total expenses and the total sales revenues. Which of the following best describes the concept of a "constraint?" Expected future costs that differ among alternatives. None of the items in this list of answers. A benefit foregone by choosing one alternative course over another. The distribution of all products to be sold.arrow_forwardFill 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.)arrow_forward
- Which of the following is a true statement? O The mark-up is designed to cover all non-product costs, such as labor, utilities, supplies, interest expense, taxes, and also to provide the desired profit. Everything else being the same, the multiple for the ingredient mark-up approach to pricing will be smaller than the multiple for the prime ingredient mark-up approach. In the ingredient mark-up approach to pricing, the multiple is determined by dividing 1 by the desired product cost percentage. O All of the above. Only a. and c. above. QUESTION 21 The Hotel is located on Jeju Island, Korea, a popular honeymoon destination area. For two weeks every spring, thousands of newlyweds travel to the area for fun and relaxation. Which of the following yield management tactics would make sense for pricing rooms during these two weeks? O Refuse reservations for one-night stays. O Sell all rooms at the same rates during these two weeks. Require a three-day minimum stay at the quoted rate for each…arrow_forwardFill in the Blank Question The contribution margin as a percentage of sales is referred to as the contribution margin or CM Need help? Review these concept resources. Read About the Concept I (Enter only one word per blank) 4)arrow_forwardJoint Products A101, A204, and B216. Sales and production information for each of the three adhesives are shown in the following table. Most of Johnston's customers ask for a special blend of the three products, which improves heat-resistance. The additional separable processing requires additional time and materials, and the price is increased accordingly, as shown in the table. Assume that Johnston pro- duces only for specific customer orders, so there is no beginning or ending inventory. Assume also that all of Johnston's customers requested the heat-resistant version of the products so that all produc- tion required additional separable processing. Total joint cost for the three products is $3,500,000. Johnston Adhesives Company makes three widely used industrial adhesives: A101 A204 B216 175,000 %$4 115,000 $. Gallons sold 135,000 14 $4 10 12 Final sales price per gallon Price at split-off Separable processing cost 10 10 $550,000 $125,000 $625,000arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education