14 (20 MINUTES) A. CASE #1 CASE #2 NUMBER OF UNITS SOLD ......

Exercise 6-14 (20 minutes)

a. Case #1 Case #2

Number of units sold ... 15,000 * 4,000

Sales ... $180,000 * $12 $100,000 * $25

Less variable expenses... 120,000 * 8 60,000 15

Contribution margin... 60,000 $ 4 40,000 $10 *

Less fixed expenses... 50,000 * 32,000 *

Net operating income .... $ 10,000 $ 8,000 *

Case #3 Case #4

Number of units sold ... 10,000 * 6,000 *

Sales ... $200,000 $20 $300,000 * $50

Less variable expenses... 70,000 * 7 210,000 35

Contribution margin... 130,000 $13 * 90,000 $15

Less fixed expenses... 118,000 100,000 *

Net operating income .... $ 12,000 * $(10,000) *

b. Case #1 Case #2

Sales ... $500,000 * 100% $400,000 * 100%

Less variable expenses... 400,000 80 260,000 * 65

Contribution margin ... 100,000 20% * 140,000 35%

Less fixed expenses ... 93,000 100,000 *

Net operating income... $ 7,000 * $ 40,000

Case #3 Case #4

Sales... $250,000 100% $600,000 * 100%

Less variable expenses .. 100,000 40 420,000 * 70

Contribution margin... 150,000 60% * 180,000 30%

Less fixed expenses... 130,000 * 185,000

Net operating income .... $ 20,000 * $ (5,000) *

*Given