24. Schister Systems uses the following data in its Cost-Volume-Profit analyses:

Question

24. Schister Systems uses the following data in its Cost-Volume-Profit analyses: Total s400,00 Sales Variable expenses Contribution margin Fixed expenses Net operating income 280,000 20,000 100,000 20,000 What is total contribution margin if sales volume increases by 20%? A) $80,000 B) $158,400 C) $200,000 D) $144,000 25. Ploeger Corporation has provided the following contribution format income statement. Assume tha the following information is within the relevant range. S 240,000 156,000 84,000 81,900 2.100 Sales (4,000 units) Variable expenses Contribution margin Fixed expenses Net operating income The break-even point in dollar sales is closest to: A) $234,000 B) $237,900 C) S156,000 D) SO 26. Stockmaster Corporation has provided the following contribution format income statement. that the following information is within the relevant range. Sales (8,000 units) Variable expenses Contribution margin Fixed expenses Net operating income 320,000 192,000 128,000 121,600 6,400 The margin of safety in dollars is closest to: A) $6,400 B) S16,000 C) $121,600 D) S128,000

Explanation / Answer

24. Answer: Option D) $144,000

Contribution margin ratio = Contribution margin / Sales = $120000 / $400000 = 30%

Revised sales = $400000 + 20% = $480000

Revised contribution margin = $480000 x 30% = $144000

25. Answer: Option A) $234,000

Break-even point in dollar sales = Fixed expenses / Contribution margin ratio

Contribution margin ratio = Contribution margin / Sales = $84000 / $240000 = 35%

Break-even point in dollar sales = $81900 / 35% = $234000

26. Answer: Option B) $16,000

Margin of safety = Actual sales – Break-even sales

Break-even point in dollar sales = Fixed expenses / Contribution margin ratio

Contribution margin ratio = Contribution margin / Sales = $128000 / $320000 = 40%

Break-even point in dollar sales = $121600 / 40% = $304000

Margin of safety = $320000 - $304000 = $16000

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