Exercise 6-1 & Exercise 6-5
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EXERCISE 6-1
Contribution format income statement under each of conditions each case : 1. The sales volume increases by 100 units. ITEM
TOTAL
PER UNIT
Sales ( 10, 100 units) (-) variable expenses
$ 353, 500 ( 202, 000 )
$ 35 ( 20. 00 )
Contribution margin (-) fixed expenses Net operating income
151, 500 ( 135, 000 ) $ 16, 500
$ 15
2. The sales volume decreases by 100 units. ITEM
TOTAL
PER UNIT
Sales ( 9, 900 units) (-) variable expenses
$ 346, 500 ( 198, 000 )
$ 35 ( 20. 00 )
Contribution margin (-) fixed expenses Net operating income
148, 500 ( 135, 000 ) $ 13, 500
$ 15
ITEM Sales ( 9, 000 units) (-) variable expenses
TOTAL $ 315, 000 ( 180, 000 )
PER UNIT $ 35 ( 20. 00 )
Contribution margin (-) fixed expenses Net operating income
135, 000 ( 135, 000) 0
$ 15
3. The sales volume is 9, 000
EXERCISE 6-5
Selling price - $ 15 Variable cost - $ 12 per unit Fixed expenses - $ 4, 200 1. Unit sales using the equation method : Sales = variable expenses + fixed expenses + profit $ 15 Q = $ 12Q + $ 4, 200 + $ 0 $ 3Q = $ 4, 200 Q = $ 1, 400 2. In sales dollars using the equation method and the CM ratio : CM ratio = contribution margin / sales Sales $ 15 ( - ) vc exp $ 12 Contribution margin $ 3 CM ratio = $ 3 / $15 = 20 % X = 0.8 X + $ 4, 200 + $ 0 0.2 X = $ 4, 200 X = $ 21, 000 or $ 15 per unit, 1, 400 unit 3. In unit sales using the contribution margin : Break – even point in unit sold = fixed expenses / unit contribution margin $ 4, 200 / $ 3 per unit = 1, 400 unit 4. In sales dollar using the contribution margin and the CM ratio : Break – even point in total sales dollar = fixed expenses / CM ratio $ 4, 200 / 0.2 = $ 21, 000
Contribution format income statement under each of conditions each case : 1. The sales volume increases by 100 units. ITEM
TOTAL
PER UNIT
Sales ( 10, 100 units) (-) variable expenses
$ 353, 500 ( 202, 000 )
$ 35 ( 20. 00 )
Contribution margin (-) fixed expenses Net operating income
151, 500 ( 135, 000 ) $ 16, 500
$ 15
2. The sales volume decreases by 100 units. ITEM
TOTAL
PER UNIT
Sales ( 9, 900 units) (-) variable expenses
$ 346, 500 ( 198, 000 )
$ 35 ( 20. 00 )
Contribution margin (-) fixed expenses Net operating income
148, 500 ( 135, 000 ) $ 13, 500
$ 15
ITEM Sales ( 9, 000 units) (-) variable expenses
TOTAL $ 315, 000 ( 180, 000 )
PER UNIT $ 35 ( 20. 00 )
Contribution margin (-) fixed expenses Net operating income
135, 000 ( 135, 000) 0
$ 15
3. The sales volume is 9, 000
EXERCISE 6-5
Selling price - $ 15 Variable cost - $ 12 per unit Fixed expenses - $ 4, 200 1. Unit sales using the equation method : Sales = variable expenses + fixed expenses + profit $ 15 Q = $ 12Q + $ 4, 200 + $ 0 $ 3Q = $ 4, 200 Q = $ 1, 400 2. In sales dollars using the equation method and the CM ratio : CM ratio = contribution margin / sales Sales $ 15 ( - ) vc exp $ 12 Contribution margin $ 3 CM ratio = $ 3 / $15 = 20 % X = 0.8 X + $ 4, 200 + $ 0 0.2 X = $ 4, 200 X = $ 21, 000 or $ 15 per unit, 1, 400 unit 3. In unit sales using the contribution margin : Break – even point in unit sold = fixed expenses / unit contribution margin $ 4, 200 / $ 3 per unit = 1, 400 unit 4. In sales dollar using the contribution margin and the CM ratio : Break – even point in total sales dollar = fixed expenses / CM ratio $ 4, 200 / 0.2 = $ 21, 000
