Question

Ploy Media publishes and sells two magazines, including Rural Living and Urban Living. Its contribution margin income statement for July 2019 is as follows.

Play Media
Contribution Margin income Statement
For the Month Ending July 31, 2019
	Rural	Urban	Total
Sales	$400,000	$150,000	$550,000
Variable Costs	155,000	65,000	220,000
Contribution Margin	245,000	85,000	330,000
Fixed Costs			150,000
Operating Profit			180,000

a) Calculate the company-wide contribution margin ratio.

b) Calculate the company-wide breakeven point in sales dollars.

c) Prove that your answer in part b) is correct by using the sales figure from part b) to prepare a contribution margin income statement similar to the one above.

Answer 1

Sales Varaibles Expense 3 contribution Margin Fixed Expense Net operating Margin Date Rural Urban Totals 400000 150000 550000 155000 65000 220000 245000 85000 330000 150000 180000 1. Overall Contribution Margin of the Company - Total Contribution Margin / total Sales = 330000/150000 60% 2. Overall Break Even poin in dollar Sales = Fixed Cost / CM Ratio = 150000/60% 250000 Contribution Margin income Statement at the Companies Break Even point Rural Urban Totals Sales 181818.18 68181.82 250000 Varaibles Expense 70454.55 29545.45 100000 contribution Margin 111363.64 38636.36 150000 Fixed Expense 150000 Net operating Margin Sales MixRatio=Division Sales/Total sales Variable Cost ratio Sales = Total Sales Sales mix Ratio Variable cost = sales *VC Ratio | Urban 0.727272727 0.272727273 0.3875 0.433333333 181818.1818 68181.81818 70454.54545 29545.45455

Answer: C) Contribution Margin Statement is Prepared without Roundoff the intermediate Calculations. if any Further Clarification please Comment.