1 Total sales $200,000
Total variable expenses 120,000
Total contribution margin $80,000
Total contribution margin $80,000
Total sales $200,000
Contribution margin ratio 40%
2 Total variable expenses 120,000
Total sales $200,000
Variable expense ratio 60%
# Total Per Unit
1 Sales (10,100 units) $353,500 $35.00
variable expenses 202,000 20.00
Contribution margin 151,500 $15.00
Fixed expenses 135,000
Net operating income $16,500
2 Sales (9, 900 units) $346,500 $35.00
Variable expenses 198,000 20.00
Contribution margin $148,500 $15.00
Fixed expenses 135,000
Net operating income $13,500
3 Sales (9, 000 units) $315,000.00 $35.00
Variable expenses 180,000 20.00
Contribution margin $135,000.00 $15.00
Fixed expenses 135,000
Net operating income $0
#
1 Contribution margin $48,000
Net operating income $10,000
Degree of operating leverage 4.8
2 Degree of operating leverage 4.8
Percent increase in unit sales 5%
Estimated percent increase in net operating 24% Increase
3 Net operating income reflecting change in sales $12,400
Original net operating income 10,000
Change in net operating income $2,400
Percent in net operating income 24%
Engberg Company
Contribution Income Statement
Amount Percent of Sales
Sales $84,000 100%
Variable expenses -33,600 40%
Contribution margin 50,400 60%
Fixed expenses -38,000
Net operating income $12,400
1 Profit = Unit CM * Q - Fixed Expenses
0 = (15-12) * Q - 4,200
10 = (3) * Q - 4,200
3Q = 4,200
Q = 4,200/3
Q = 1,400 baskets
2 Unit sales to break even 1,400.00
Selling price per unit 15.00
Dollar sales to break even 21,000.00
3 Profit = Unit CM * Q - Fixed Expenses
0 = (15-12) * Q - 4,200
10 = (3) * Q - 4,800
3Q = 4,800
Q = 4,800/3
Q = 1,600 baskets
Unit sales to break even 1,600.00
Selling price per unit 15.00
Dollar sales to break even 24,000.00
1 Profit = Unit CM * Q - Fixed Expenses
0 = (30-20) * Q - 7,500
0 = (10) * Q - 7,500
10Q = 7,500
Q =7,500/10
Q = 750 units or at 30 per unit, 22, 500
Sales (at the budgeted volume of 1,000 $30,000
Less break-even sales 22,500
Margin of safety (in dollars) $7,500
2 Margin of safety (in dollars) $7,500
Sales $30,000
Margin of safety percentage 25%
1 Profit = Unit CM * Q - Fixed Expenses
10,000 = (120-80) * Q - 50,000
10,000 = (40) * Q - 50,000
40 * Q = 10,000 / 50,000
Q=60,000 / 40
Q = 1,500
2 Profit = Unit CM * Q - Fixed Expenses
15,000 = (120-80) * Q - 50,000
15,000 = (40) * Q - 50,000
40 * Q = 15,000 / 50,000
Q=65,000 / 40
Q = 1,625
Unit sales to attain the target profit 1,625.00
Seling price per unit 120.00
Dollar sales to attain target profit 195,000.00
Sales with
Additional
1a. Advertising
Currect Sales Budget Difference
Sales $180,000 $189,000 $9,000
Variable expenses 126,000 132,300 6,300
Contribution margin 54,000 56,700 2,700
Fixed expenses 30,000 35,000 5,000
Net operating incom $24,000 $21,700 -$2,300 decrease
1b. Should advertising budget be increasNo
CV GRAPH
1 Total CM 30,000.00
Total Sales 100,000.00
Overal CM ratio 30%
2 Total fixed expenses 24,000
Oveall CM ratio 30%
Overall break-even analysis 80,000
3 Lucido Products
Contribution Income Statement
Claimjumper Makeover Total
Sales $24,000 $56,000 $80,000
Variable expenses 16,000 40,000 56,000
Contribution margin $8,000 $16,000 24,000
Fixed expenses 24,000
Net operating income (loss) $0
1 Case 1 Case 2 Case 3 Case 4
Unit sold 15,000 4,000 10,000 6,000
Sales $180,000 $100,000 $200,000 $300,000
Variable expenses 120,000 60,000 70,000 210,000
Fixed expense 50,000 32,000 118,000 100,000
Net operating income (loss) $10,000 $8,000 $12,000 -$10,000
Contribution margin per unit $4 $10 $13 $15
2 Case 1 Case 2 Case 3 Case 4
Sales $500,000 $400,000 $250,000 $600,000
Variable expenses 400,000 260,000 100,000 420,000
Fixed expense 93,000 100,000 130,000 185,000
Net operating income (loss) $7,000 $40,000 $20,000 -$5,000
Contribution margin per unit (per 20% 35% 60% 30%
