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.

Ratio analysis is a method to know the company's performance for a particular period. It's…

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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