Required A Required B Assume that more than one product is being sold in each of the four following case situations: (Loss amounts should be indicated by sign.) Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Contribution margin ratio (percent) $ $ Case 1 446,000 89,700 45 % $ < Required A Case 2 206,000 133,900 51,000 % $ Case 3 470,000 73,620 77% Required BS $ $ Case 4 306,000 76,500 (1,500) %

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Analysis of Financial Case Situations**

The table shown provides a comparative financial analysis for four distinct case situations. Each case involves sales of more than one product and breaks down various financial elements including sales, variable expenses, contribution margin, fixed expenses, net operating income (loss), and contribution margin ratio. 

Here is an analysis of each case:

**Case 1:**
- **Sales:** $446,000
- **Variable Expenses:** [Data not provided]
- **Contribution Margin:** [Data not provided]
- **Fixed Expenses:** [Data not provided]
- **Net Operating Income (Loss):** $89,700
- **Contribution Margin Ratio:** 45%

**Case 2:**
- **Sales:** $206,000
- **Variable Expenses:** $133,900
- **Contribution Margin:** [Data not provided]
- **Fixed Expenses:** $51,000
- **Net Operating Income (Loss):** [Data not provided]
- **Contribution Margin Ratio:** [Data not provided]

**Case 3:**
- **Sales:** [Data not provided]
- **Variable Expenses:** [Data not provided]
- **Contribution Margin:** [Data not provided]
- **Fixed Expenses:** $470,000
- **Net Operating Income (Loss):** $73,620
- **Contribution Margin Ratio:** 77%

**Case 4:**
- **Sales:** $306,000
- **Variable Expenses:** $76,500
- **Contribution Margin:** [Data not provided]
- **Fixed Expenses:** [Data not provided]
- **Net Operating Income (Loss):** -$1,500 (indicating a loss)
- **Contribution Margin Ratio:** [Data not provided]

**Explanation:**
- **Sales:** Represents the total revenue generated.
- **Variable Expenses:** Costs that vary with the level of output.
- **Contribution Margin:** Sales revenue minus variable expenses, showing the amount available to cover fixed expenses and profit.
- **Fixed Expenses:** Costs that do not change with the level of output.
- **Net Operating Income (Loss):** Indicates profitability after subtracting fixed expenses from the contribution margin.
- **Contribution Margin Ratio:** Contribution margin expressed as a percentage of sales, reflecting how much each dollar of sales contributes to fixed costs and profit.

Note: Some data points are missing and need to be calculated or filled in for a complete financial picture.
Transcribed Image Text:**Analysis of Financial Case Situations** The table shown provides a comparative financial analysis for four distinct case situations. Each case involves sales of more than one product and breaks down various financial elements including sales, variable expenses, contribution margin, fixed expenses, net operating income (loss), and contribution margin ratio. Here is an analysis of each case: **Case 1:** - **Sales:** $446,000 - **Variable Expenses:** [Data not provided] - **Contribution Margin:** [Data not provided] - **Fixed Expenses:** [Data not provided] - **Net Operating Income (Loss):** $89,700 - **Contribution Margin Ratio:** 45% **Case 2:** - **Sales:** $206,000 - **Variable Expenses:** $133,900 - **Contribution Margin:** [Data not provided] - **Fixed Expenses:** $51,000 - **Net Operating Income (Loss):** [Data not provided] - **Contribution Margin Ratio:** [Data not provided] **Case 3:** - **Sales:** [Data not provided] - **Variable Expenses:** [Data not provided] - **Contribution Margin:** [Data not provided] - **Fixed Expenses:** $470,000 - **Net Operating Income (Loss):** $73,620 - **Contribution Margin Ratio:** 77% **Case 4:** - **Sales:** $306,000 - **Variable Expenses:** $76,500 - **Contribution Margin:** [Data not provided] - **Fixed Expenses:** [Data not provided] - **Net Operating Income (Loss):** -$1,500 (indicating a loss) - **Contribution Margin Ratio:** [Data not provided] **Explanation:** - **Sales:** Represents the total revenue generated. - **Variable Expenses:** Costs that vary with the level of output. - **Contribution Margin:** Sales revenue minus variable expenses, showing the amount available to cover fixed expenses and profit. - **Fixed Expenses:** Costs that do not change with the level of output. - **Net Operating Income (Loss):** Indicates profitability after subtracting fixed expenses from the contribution margin. - **Contribution Margin Ratio:** Contribution margin expressed as a percentage of sales, reflecting how much each dollar of sales contributes to fixed costs and profit. Note: Some data points are missing and need to be calculated or filled in for a complete financial picture.
### Financial Analysis of Single Product Sales Across Different Cases

This table analyzes the sales performance of a single product in four different scenarios, labeled as Case 1 through Case 4. Each case includes key financial metrics: units sold, total sales, variable expenses, contribution margin, fixed expenses, net operating income (loss), and contribution margin per unit. The figures are structured as follows:

#### Case 1
- **Units sold:** 8,400
- **Sales:** $243,600
- **Variable expenses:** $168,000
- **Contribution margin:** $75,600
- **Fixed expenses:** $90,000
- **Net operating income (loss):** $(14,400)
- **Contribution margin per unit:** $9

#### Case 2
- **Units sold:** Not specified
- **Sales:** $366,600
- **Variable expenses:** Not specified
- **Contribution margin:** $34,400
- **Fixed expenses:** $163,000
- **Net operating income (loss):** Not specified
- **Contribution margin per unit:** $14

#### Case 3
- **Units sold:** 19,300
- **Sales:** Not specified
- **Variable expenses:** $173,700
- **Contribution margin:** Not specified
- **Fixed expenses:** Not specified
- **Net operating income (loss):** $186,200
- **Contribution margin per unit:** $14

#### Case 4
- **Units sold:** 5,500
- **Sales:** $165,000
- **Variable expenses:** Not specified
- **Contribution margin:** Not specified
- **Fixed expenses:** $80,000
- **Net operating income (loss):** $(25,000)
- **Contribution margin per unit:** $14

### Key Observations
- **Contribution Margin:** Reflects the profitability of each unit sold. Varies across cases, which affects overall profitability.
- **Net Operating Income/Loss:** Indicates financial health post-expenses. Cases 1 and 4 report losses, while Case 3 shows a significant profit.
- **Fixed Expenses:** Remain constant regardless of units sold, impacting overall net income based on volume.

This analysis provides insights into how different sales volumes and expense structures can affect overall business profitability. It is important for businesses to understand these dynamics to make informed financial decisions.
Transcribed Image Text:### Financial Analysis of Single Product Sales Across Different Cases This table analyzes the sales performance of a single product in four different scenarios, labeled as Case 1 through Case 4. Each case includes key financial metrics: units sold, total sales, variable expenses, contribution margin, fixed expenses, net operating income (loss), and contribution margin per unit. The figures are structured as follows: #### Case 1 - **Units sold:** 8,400 - **Sales:** $243,600 - **Variable expenses:** $168,000 - **Contribution margin:** $75,600 - **Fixed expenses:** $90,000 - **Net operating income (loss):** $(14,400) - **Contribution margin per unit:** $9 #### Case 2 - **Units sold:** Not specified - **Sales:** $366,600 - **Variable expenses:** Not specified - **Contribution margin:** $34,400 - **Fixed expenses:** $163,000 - **Net operating income (loss):** Not specified - **Contribution margin per unit:** $14 #### Case 3 - **Units sold:** 19,300 - **Sales:** Not specified - **Variable expenses:** $173,700 - **Contribution margin:** Not specified - **Fixed expenses:** Not specified - **Net operating income (loss):** $186,200 - **Contribution margin per unit:** $14 #### Case 4 - **Units sold:** 5,500 - **Sales:** $165,000 - **Variable expenses:** Not specified - **Contribution margin:** Not specified - **Fixed expenses:** $80,000 - **Net operating income (loss):** $(25,000) - **Contribution margin per unit:** $14 ### Key Observations - **Contribution Margin:** Reflects the profitability of each unit sold. Varies across cases, which affects overall profitability. - **Net Operating Income/Loss:** Indicates financial health post-expenses. Cases 1 and 4 report losses, while Case 3 shows a significant profit. - **Fixed Expenses:** Remain constant regardless of units sold, impacting overall net income based on volume. This analysis provides insights into how different sales volumes and expense structures can affect overall business profitability. It is important for businesses to understand these dynamics to make informed financial decisions.
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