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Cost-Volume-Profit Relations: Missing Data Following are data from 4 separate companies. Supply the missing data in each in Case 1 Case 3 Case 4 $100,000 $40,000) $ $24,000 $ Sales revenue Contribution margin Fixed Costs Net income $ Variable cost ratio Contribution margin ratio Break-even point (dollars) $ Margin of safety (dollars) $ LA SA $ Case 2 $90,000 $ $7,000 0.50 $ $ LA LA $ $ $20,000 $ $ $9,000 $ 0.40 0.20 $20,000 $30,000

Cost-Volume-Profit Relations: Missing Data Following are data from 4 separate companies. Supply the missing data in each in Case 1 Case 3 Case 4 $100,000 $40,000) $ $24,000 $ Sales revenue Contribution margin Fixed Costs Net income $ Variable cost ratio Contribution margin ratio Break-even point (dollars) $ Margin of safety (dollars) $ LA SA $ Case 2 $90,000 $ $7,000 0.50 $ $ LA LA $ $ $20,000 $ $ $9,000 $ 0.40 0.20 $20,000 $30,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please explain the calculation of variable cost ratio

**Cost-Volume-Profit Relations: Missing Data** The table provides data from four separate companies. Your task is to supply the missing data in each independent case. | | Case 1 | Case 2 | Case 3 | Case 4 | |--------------------|-----------|-----------|---------|-----------| | Sales revenue | $100,000 | $90,000 | | | | Contribution margin| $40,000 | | $20,000 | | | Fixed Costs | $24,000 | | | | | Net income | | $7,000 | $9,000 | | | Variable cost ratio| | 0.50 | | 0.20 | | Contribution margin ratio | | | | 0.40 | | Break-even point (dollars)| | | | $20,000 | | Margin of safety (dollars)| | | | $30,000 | **Explanation:** - **Sales revenue:** Lists the total revenue from sales for each case. - **Contribution margin:** Describes the sales revenue minus variable costs for each case. - **Fixed Costs:** Lists the unchanging cost that does not vary with the level of sales or production. - **Net income:** Displays the remaining profit after all expenses are subtracted from total revenue. - **Variable cost ratio:** The proportion of costs that are variable, as compared to total sales. - **Contribution margin ratio:** The contribution margin divided by sales revenue, representing the percentage of sales contributing to fixed costs and profit. - **Break-even point (dollars):** The sales level at which total revenues equal total costs, resulting in zero net income. - **Margin of safety (dollars):** The extent by which sales can drop before reaching the break-even point. This exercise involves calculations like determining the missing values using the relationships between these financial metrics.
Transcribed Image Text:**Cost-Volume-Profit Relations: Missing Data** The table provides data from four separate companies. Your task is to supply the missing data in each independent case. | | Case 1 | Case 2 | Case 3 | Case 4 | |--------------------|-----------|-----------|---------|-----------| | Sales revenue | $100,000 | $90,000 | | | | Contribution margin| $40,000 | | $20,000 | | | Fixed Costs | $24,000 | | | | | Net income | | $7,000 | $9,000 | | | Variable cost ratio| | 0.50 | | 0.20 | | Contribution margin ratio | | | | 0.40 | | Break-even point (dollars)| | | | $20,000 | | Margin of safety (dollars)| | | | $30,000 | **Explanation:** - **Sales revenue:** Lists the total revenue from sales for each case. - **Contribution margin:** Describes the sales revenue minus variable costs for each case. - **Fixed Costs:** Lists the unchanging cost that does not vary with the level of sales or production. - **Net income:** Displays the remaining profit after all expenses are subtracted from total revenue. - **Variable cost ratio:** The proportion of costs that are variable, as compared to total sales. - **Contribution margin ratio:** The contribution margin divided by sales revenue, representing the percentage of sales contributing to fixed costs and profit. - **Break-even point (dollars):** The sales level at which total revenues equal total costs, resulting in zero net income. - **Margin of safety (dollars):** The extent by which sales can drop before reaching the break-even point. This exercise involves calculations like determining the missing values using the relationships between these financial metrics.
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