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Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall
Edition 9ISBN: 0073527068Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall
Edition 9ISBN: 0073527068 Exercise 32
Understanding CVP relationships Calculate the missing amounts for each of the following firms:
| Units Sold | Selling Price | Variable Costs per Unit | Contribution Margin | Fixed Costs | Operating Income (Loss) |
Firm A | 5,600 | $12.00 | ? | $25,200 | $20,300 | ? |
Firm B | 16,800 | ? | $22.20 | ? | 84,500 | $ 43,180 |
Firm C | ? | 7.30 | 3.20 | 28,700 | ? | (13,500) |
Firm D | 14,160 | ? | 55.25 | 66,552 | 73,250 | ? |
Step-by-step solution
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Finding the missing amounts:
Firm A: We already know the contribution margin in this case. Formula for calculating contribution margin is as follows:
Therefore,
For this case,
On substituting these values in the formula for variable cost we get,
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Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall
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