E5-1 1 Sales $ 200,000

Variable expenses - 120,000

Contribution margin $ 80,000

Contribution margin $ 80,000

Sales / 200,000
Contribution margin ratio $ 40%

2 Variable expenses $ 120,000

Sales / 200,000
Variable expenses ratio $ 60%
 10,100
E5-2 1 Per Unit Units
Sales (10,100 units) $ 35 $ 353,500
Variable expenses 20 202,000
Contribution margin $ 15 151,500
Fixed expenses 135,000
Revised net operating income $ 16,500

9,900
2 Per Unit Units
Sales (9,900) $ 35 $ 346,500
 Variable expenses 20 $ 198,000
Contribution margin $ 15 $ 148,500
Fixed expenses 135,000
Revised net operating income $ 13,500

3 9,000
Per Unit Total
Sales (9,000) $ 35 $ 315,000
Variable expenses 20 $ 180,000
Contribution margin $ 15 $ 135,000
Fixed expenses 135,000
Revised net operating income $ -
E5-3 1 Contribution margin 48,000
Net operating income / 10,000
Degree of operating leverage 4.8

2 Degree of operating leverage 4.8

Unit sales (increase) x 5%
Net operating income (increase) 24%

3 Engberg Company
Contribution Income Statement
Amount Percent of Sales
Sales $ 84,000 100%
Variable expenses 33,600 40%
Contribution margin 50,400 60%
Fixed expenses 38,000
Net operating income $ 12,400
E5-4 1 Fixed expenses $ 4,200
Unit CM / 3
Unit sales to break-even 1,400 baskets

2 Fixed expenses $ 4,200

CM ratio (P3/P15) / 0.2
Unit sales to break-even $ 21,000

3 Fixed expenses $ 4,800

Unit CM / 3
Unit sales to break-even 1,600 baskets

4 Fixed expenses $ 4,800

CM ratio (P3/P15) / 0.2
Unit sales to break-even $ 24,000
E5-5 1 Sales (at budgeted volume) $ 30,000
Breakeven sales - 22,500
2 Margin of safety (in dollars) $ 7,500

2 Margin of safety (in dollars) $ 7,500

Sales / 30,000
Margin of safety percentage 25%
E5-6 1 Profit = Unit CM x Q - Fixed Expenses
10,000 = (120 - 80) x Q - 50,000
10,000 = (40) x Q - 50,000
40 x Q = 10,000 + 50,000
Q = 60,000 / 40
Q = 1,500 units
Unit sales to attain target profit (Q) 1,500

2 Profit = Unit CM x Q - Fixed Expenses

15,000 = (120 - 80) x Q - 50,000
15,000 = (40) x Q - 50,000
40 x Q = 15,000 + 50,000
Q = 65,000 / 40
Q = 1,625 units
Unit sales to attain target profit (Q) 1,625
Selling price per unit (P) 120
Dollar sales to attain target profit (Q) 195,000
 Current Sales Difference
E5-7 1 Sales 180,000 184,000 4,000
Variable expenses 126,000 132,300 6,300
Contribution margin 54,000 51,700 (2,300)
Fixed expenses 30,000 30,000 -
Net operating income (loss) 24,000 21,700 (2,300) decrease

Current Sales Difference

2 Sales 180,000 198,000 18,000
Variable expenses ($65) 126,000 143,000 17,000
Contribution margin 54,000 55,000 1,000
Fixed expenses 30,000 30,000 -
Net operating income (loss) 24,000 25,000 1,000 increase
 250000
E5-8 1 Karlik Enterprises
Contribution Income Statement
200000
$192,000
Data inputs
Unit Sales (Q) 0 8000
Selling price per unit (P) 24 150000
Variable expenses per unit (V) 18
Total fixed expenses $ 24,000
100000
Percent of
Total Per Unit Sales
Sales $ 192,000 $ 24 100% 50000
Variable expenses 144,000 $ 18 75%
$24,000 $24,000
Contribution margin 48,000 $ 6 25%
8000
Fixed expenses 24,000 0 $- 0
Volume in Units
Net operating income $ 24,000

CVP Graph Information

 Sales Dollars Total Expenses
$ - $ - $ 24,000 $ 24,000
Volume in Units
8000 $ 192,000 $ 24,000 $ 168,000

2 Fixed Expenses $ 24,000

/ Unit CM 6
Break-even point in sales $ 4,000
$192,000

$24,000
8000
0
E5-10 1 Total contribution margin $ 30,000
Total sales 100,000
Overall CM ratio 30%

2 Total fixed expenses $ 24,000

Overall CM ratio 30%
Overall break-even point $ 80,000

3 Lucido Prodcuts
Contribution Income Statement
 Claimjumper Makeover Total
Sales 24,000 56,000 80,000
Variable expenses 18,000 40,000 56,000
Contribution margin 6,000 16,000 24,000
Fixed expenses 24,000
Net operating income (loss) 0
 Case 1 Case 2 Case 3 Case 4
E5-11 1 Units sold 15,000 4,000 10,000 6,000
Sales 180,000 100,000 200,000 300,000
Variable expenses 120,000 60,000 70,000 210,000
Fixed expenses 50,000 32,000 118,000 100,000
 Net operating income (loss) 10,000 8,000 12 (10,000)
Contribution margin per unit 4 10 13 15

2 Case 1 Case 2 Case 3 Case 4

Sales 500,000 400,000 250,000 600,000
Variable expenses 400,000 260,000 100,000 420,000
Fixed expenses 93,000 100,000 130,000 185,000
Net operating income (loss) 7,000 40,000 20,000 (5,000)
Contribution margin (percent) 20% 35% 60% 30%