Cost-Volume-Profit Relations: Missing DataFollowing are data from 4 separate companies. Supply the missing data in each independent case. Case 1Case 2Case 3Case 4Sales revenue$100,000$70,000AnswerAnswerContribution margin$40,000Answer$30,000AnswerFixed Costs$28,000AnswerAnswerAnswerNet incomeAnswer$8,000$8,000AnswerVariable cost ratioAnswer0.50Answer0.20Contribution margin ratioAnswerAnswer0.50AnswerBreak-even point (dollars)AnswerAnswerAnswer$30,000Margin of safety (dollars)AnswerAnswerAnswer$20,000

Cost volume profit analysis is one the method under the cost accounting to determine the relationship between the cost of goods sold, the volume or the quantity of good sold, and profit to be earned by the business entity. The CVP analysis helps to take costing decisions related to the goods to be sold. Case 1 Case 2 Case 3 Case 4 Sales revenue $100,000 $70,000 =Contribution marginConbtribution margin ratio=$30,0000.50=$60,000 =Breakeven sales+Margin of Safety=$30,000+$20,000=$50,000 Contribution margin $40,000 Varable cost ratio=Sales-Contribution marginSales0.50=$70,000-Contribution margin$70,000Contribution margin=$35,000 $30,000 Varable cost ratio=Sales-Contribution marginSales0.20=$50,000-Contribution margin$50,000Contribution margin=$40,000 Fixed Costs $28,000 =Contribution margin-net income=$35,000-$8,000=$27,000 =Contribution margin-net income=$30,000-$8,000=$22,000 =Breakeven sale×Contribution margin ratio=$30,000×0.80=$24,000 Net income =Contribution margin-Fixed costs=$40,000-$28,000=$12,000 $8,000 $8,000 =Contribution margin-Fixed costs=$40,000-$24,000=$16,000 Variable cost ratio =Sales-Contribution marginSales=$100,000-$40,000$100,000=0.60 0.50 =Sales-Contribution marginSales=$60,000-$30,000$60,000=0.50 0.20 Contribution margin ratio =Contribution marginSales=$40,000$100,000=0.40 =Contribution marginSales=$35,000$70,000=0.50 0.50 =Contribution marginSales=$40,000$50,000=0.80 Break-even point (dollars) =Fixed costContribution margin ratio=$28,0000.40=$70,000 =Fixed costContribution margin ratio=$27,0000.50=$54,000 =Fixed costContribution margin ratio=$22,0000.50=$44,000 $30,000 Margin of safety (dollars) =Sales-Breakeven sales=$100,000-$70,000=$30,000 =Sales-Breakeven sales=$70,000-$54,000=$16,000 =Sales-Breakeven sales=$60,000-$44,000=$16,000 $20,000

Answered: Supply the missing data in each…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Cost-Volume-Profit Relations: Missing Data
Following are data from 4 separate companies. Supply the missing data in each independent case.

	Case 1	Case 2	Case 3	Case 4
Sales revenue	$100,000	$70,000	Answer	Answer
Contribution margin	$40,000	Answer	$30,000	Answer
Fixed Costs	$28,000	Answer	Answer	Answer
Net income	Answer	$8,000	$8,000	Answer
Variable cost ratio	Answer	0.50	Answer	0.20
Contribution margin ratio	Answer	Answer	0.50	Answer
Break-even point (dollars)	Answer	Answer	Answer	$30,000
Margin of safety (dollars)	Answer	Answer	Answer	$20,000

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