Question

S and sells a single product, has provided its 10. Bazinga Corporation, a company that produces and sells a single product, has provided contribution format income statement for March Sales (5,000 units) Variable expenses $206,000 125.000 Contribution margin 80.000 Fixed expenses _62.400 Net operating income $ 177.600 If the company sells 5.400 units its not operating income should be closest to A $19,008 B. $17,600 C. $24,000 D. $34,000 11. The records of the Cloud City Corporation show the following for the most recent year: Sales (16,000 units) $256,000 Variable expenses $160,000 Net operating income $ 32,000 Given these data, the unit contribution margin was: A $16 B. $4 C. $2 -D. $6 12. Cyberdine Systems reported total sales of $300,000, at a price of $20 and per unit variable expenses of $12, for the sales of a single product. Total Per Unit Sales $300,000 $20 Variable expenses 180.000 Contribution margin 120,000 Fixed expenses 100,000 Net operating income $ 20,000 What is the amount of contribution margin if sales volume increases by 30%? A. $19,500 B. $150,000 -C. $156,000 D. $120,000

Answer 1

Net operating income = Sales – variable expenses – fixed expenses

i.e. contribution margin – fixed expenses

Contribution margin grows in proportion to sales

= 80,000*5400/5000 – 62,400

= $24,000

i.e. C is the answer

Unit contribution margin = (Sales – Variable expenses)/Number of units

= (256000-160,000)/16000

= $6 per unit

i.e. D

Contribution margin grows in proportion to sales

= 120,000 + 30%*120,000

= $156,000

i.e. C