Slide 1
4.4 Basic s of Cost-Volume -Pr
- fit
E xhibit T 4M4~1 Contribution Inc ome Sta tement for T HE COMPANY
Contr ibution Ma r g in R atio
600
Ne t Ope rating
720
L ess F
ixe d
25 $ 4.00 1,320
Contr ibution Mar gin
75 $12.00 3,960
L e ss Va r
iable
100 $16.00 5,280
Sa le s (330 widgets)
% Pe r Unit T
- tal
F
- r the Ye ar ending De c e mber 31
Contr ibution Inc ome State me nt
T he Company
2005 KD Ha the wa y-Dia l
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$(12,000) $ 82,000 $160,000 5,000 4 $35,000 $ 6 $280,000 20,000 3 $ 40,000 $170,000 $15 $350,000 2 $ 90,000 $162,000 $270,000 9,000 1 Net Operating Income (loss) Fixed Expense Contribution Margin per Unit Variable Expense Sales Units Sold Case
Be low is a puzzle to he lp you unde r stand how e a c h c ompone nt r e la te s to the othe r . Go to the ne xt slide to se e Case 1 c omple te d. T he n c omple te the re maining c ase s be fore looking at the solution
Unde r standing C-V-P
2005 KD Ha the wa y-Dia l
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Unde r standing C-V-P
18,000
Net Operating I ncom e
90,000
Less fixed expenses
12 108,000
Contribution Margin
18 162,000
Less Variable expense
30 270,000
Sales
9000
# units sold Per Unit Total Per Unit Total Per Unit Total Per Unit Total Case # 4 Case # 3 Case # 2 Case # 1
1 1 2 3 4 270,000 – 162,000 108,000 – 90,000 270,000/ 9,000 162,000/ 9,000 2 NUMBE RS GIVE N IN PR OBL E M 3 4 5 5 108,000/ 9,000 or 30- 18
E xhibit T 4M4~2 C-V- P e xample
2005 KD Ha the wa y-Dia l