## Contribution Margin Questions and Answers

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If accounts payable decreases what happens to the income statement?

How does the contribution margin ratio affect net operating income?

How to get the contribution margin from the contribution margin ratio?

Explain what is the difference between gross margin and contribution margin.

What is the connection between the income statement and the balance of payment statement?

Describe where to write down inventory on an income statement.

Explain how to create an income summary account in the chart accounts.

The Raymond's Ltd. is a large retailer of equipment for pickup trucks. An income statement for the company's Bed Liner Department for the most recent quarter is presented below: Raymond's Ltd. Inco...

Sue receives a base salary of $90 weekly and a 12% commission on all sales. Sue had $3,000 in sales this week. How much did she make a total?

Why is the income statement not affected by changes in inventory?

An agent made a $7,500 commission for selling a house. The commission rate is 6%. A) What was the price of the house? B) If the commission rate is raised to 7%, what commission would the agent make...

Justin works as a car salesman where he earns 8% commission on his sales and no weekly salary. What will his weekly sales have to be to earn $3,280 for the week?

Jeremy receives a base salary of $25,000 a base salary of plus 5% commission on his sales. If Jeremy received a total salary of $45,000 what were his total sales?

How is a balance sheet related to a profit and loss statement?

What is the relationship between gross margin and contribution margin?

John's salary is $1250 per month and a 5% commission on all his sales. What must the amount of his sales be to earn at least $1500 each month?

Patterson Brothers recently reported an EBITDA of $10.5 million and net income of $3.0 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for...

A salesperson receives a weekly salary of $500. In addition, $25 is paid for every item sold in excess of 200 items. How much extra is received from the sale of 216 items?

If a sales rep earns $12 per hour plus $15 per unit sold, how much will he have earned after 20 hours and 15 units sold?

Cindy gets paid a 5% commission for selling furniture. If Cindy's goal is to earn $4,000 per month in commission checks, how much furniture does she need to sell per month to reach her goal?

Cleveland Manufacturing, Inc. has most recent income statement is presented below: Sales $450,000 Cost of goods sold 200,000 Gross margin 250,000 Other operating expenses 196,000 Operating inco...

Prepare an income statement showing departmental contribution margin based on the following: Dept. X Dept. Y Rent Expense Space (square feet) 17,500 35,000 Net Sales $60,000 $40,000 Cost of Good...

Scott Power produces batteries. Scott has determined its contribution margin to be $8 per battery and their contribution margin ratio to be 0.4. What is the effect on operating profits of the sale...

Felton Paper produces paper for textbooks. Felton plans to produce 500,000 cases of paper next quarter to sell at a price of $100 per case. Each case costs the company $80 to produce. What is the t...

Doughton Bearings produces ball bearings for industrial equipment. In evaluating the financial data from the previous year, the management accountant has determined that the company's selling price...

If the price of Product A is $30 per unit, unit variable cost is $8 and total fixed cost is $10,000, what is the contribution margin ratio? a. 2.75 b. 3.75 c. 0.45 d. 0.73

ABC is a producer and merchandizer of product A and B. ABC provides a contribution margin income statement of year 20X1 as follows a) If ABC wants to gain profit Baht 50,000 and Baht 150,000 for pr...

Alley Company makes student book bags that sell for $20 each. For the coming year, management expects fixed costs to be $200,000. Variable costs are $15 per unit. Instructions: (a) Compute break-...

Determine the missing amounts. Unit Selling Price Unit Variable Costs Contribution Margin Per Unit Contribution Margin Ratio $300 $210 A B $600 C $150 D E F $400 40%

Which of the following is NOT commonly found on a functional income statement prepared in accordance with GAAP? a. Cost of Goods Sold b. Selling Expenses c. Contribution Margin d. Administrative Ex...

If total sales are $100,000, total variable costs are $30,000, and total fixed costs are $40,000, the contribution margin is a. $100,000. b. $ 40,000. c. $ 60,000. d. $ 70,000. e. none of these.

Raner, Harris. & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifie...

Price and cost for Warner Clothing: Sales price: $15 per unit Variable costs: $3 per unit Fixed costs: 42000 per month Assume that the company plans to sell 5000 units per month. Consider requireme...

If a Realtor earns 6% commission for selling a $70,000 home, what is the amount of the commission?

John earns a commission of $175 on sales of $3,000. How much does he earn on sales of $6,500?

Zeke Company sells 25,200 units at $17 per unit. Variable costs are $7 per unit, and fixed costs are $35,200. The contribution margin ratio and the unit contribution margin, respectively, are: a. 5...

If sales are $797,000, variable costs are 80% of sales, and operating income is $201,000, what is the contribution margin ratio? a. 20% b. 80% c. 76% d. 24%

Kanye West, Inc. manufactures a line of hand crafted l Pad covers and an l-Pad stand. Demand for the covers is increasing, and management requests assistance from you in determining the best sales...

Sheffield Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $205,000 and the following divisional results. Division...

If you were a sales manager and had to decide the compensation structure for your sales team, which one would you choose and why? 1. Salary plus commission 2. Salary plus quota 3. Salary, quota...

Lori sells cars and gets a 15% commission on each sale. How much did a car sell for, in dollars, if Lori earned a $3,000 commission?

A salesperson earns a 4% commission on the sales of TVs. If the salesperson's television sales total $7000, how much is the commission?

Find variable costs, fixed costs, and contribution margin ratio. (Round the contribution margin per unit to the nearest cent. Use a minus sign or parentheses to enter an operating loss.) Net Sales...

Yolanda's job as a salesclerk pays her $25 per day plus 3% commission on all her sales. If her total wages for Monday were $70, find the amount of her sales.

What is meant by contribution analysis? Provide an example.

Given below is an excerpt from a management performance report: Budget Actual Difference Contribution margin $1,200,000 $1,160,000 $40,000U Controllable fixed costs $400,000 $440,000 $40,000U. Wha...

Flip had sales of $10,000 (100 units at $100 per). Manufacturing costs consisted of direct labor $1,500, direct materials $1,400, variable factory overhead $1,000, and fixed factory overhead $500....

Explain what is meant by contribution analysis. Carefully define the term and provide examples to illustrate it.

The portion of each dollar that can be used to cover fixed costs and provide a profit is known as: A) Contribution margin ratio. B) Gross margin percent. C) Margin of safely. D) Operating lever...

Which of the following statements is true regarding a company's segment margin? A. It is primarily a measure of long-term profitability. B. It is primarily used to make short-term decisions such as...

You are evaluating orders from two customers but can accept only one of the orders because of your company's limited capacity. The first order is for 100 units of a product with a contribution marg...

What is the format of an income statement prepared under the contribution margin approach?

The Daniels Tool & Die Corporation has been in existence for a little over three years. The company's sales have been increasing each year as it builds a reputation. The company manufactures dies t...

A company has fixed costs of $750 and a per-unit contribution margin of $4. Which of the following statement(s) is (are) true? a) Each unit "contributes" $4 toward covering the fixed costs of $750....

Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales $2,090,000 Variabl...

Bluegill Company sells 9,800 units at $130 per unit. Fixed costs are $83,200, and income from operations is $9. Determine the following: a. Variable cost per unit. b. Unit contribution margin. c...

Sales are $750,000, variable costs are 70% of sales, and income from operations is $100,000. What is the contribution margin ratio and fixed cost?

Analyse the data given below and calculate the contribution margin volume variance: Budgeted Actual Product A: Price $30 Product A: Price $30 Volume sold 1500 Volume sold 1200 Variable cost per...

Golf glider makes gasoline-powered golf carts. The selling price is 5000 each, and cost are as follows: Cost per unit Total DM 2000 DL 625 Variable OH 325 Variable Selling 50 Annual fixed Prod...

Following is relevant information for Snowdon Sandwich Shop, a small business that serves sandwiches: Total fixed cost per month $1,160.00 Venable cost per sandwich 1.50 Sales price per sandwich 5...

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