# Question 3 â?? Review Problems Contribution margin and ratio Other formulas needed outside of the

Assignment
3 â€“ Review Problems Contribution margin and ratio

Other formulas needed outside of the reading material:
Sales = Variable expenses + Fixed expenses +Profit
Sales = Quantity * Units
Profit =
(Sales Ã— CM ratio) â€“ Fixed Cost

Review Problems : Contribution margin and ratio
Problem 1: (10 points)
Sales per unit = $250 Variable Cost per unit =$150
Units = 350

a) Calculate Contribution Margin Per Unit.
b) Calculate Contribution Margin (CM) Ratio Per Unit.
c) Calculate Total Contribution Margin (CM) Dollars .Problem 2: (5 points)Sales = $5,000,000CM Ratio = 0.40 Fixed cost =$1,600,000
Calculate Profit.Problem 3:A company has budgeted sales of $200,000, a profit of$60,000 and
fixed expenses of $40,000. Calculate contribution margin ratio.Review Problem : Break-even pointProblem 4: Voltar Company manufactures and sells a telephone answering machine. The company’s contribution format income statement for the most recent year is given below: Total Per unit Pct. of sales (Ratios) Sales$1,200,000

$60 100% Less variable expenses 900,000 45 ?% ——– ——– ——– Contribution margin 300,000 15 ?% Less fixed expenses 240,000 ====== ====== ——– Net operating income$60,000

======

a) What is the Contribution Margin (CM) Ratio (or percent
of sales)?
b) Calculate break-even point both in total
units and total sales dollars. Problem 5: Management is anxious to improve the company’s profit performance. Assume
that next year management wants the company to earn a minimum profit of
\$90,000.
How many units
will have to be sold to meet the target profit figure?
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