Question

Schister Systems uses the following data in its Cost-Volume-Profit analyses:

Total Sales $355,000
Variable expenses 213,000
Contribution margin 142,000
Fixed expenses 111,000
Net operating income $31,000
Required:
1. What is total contribution margin if sales volume increases by 30%?

Answer 1

Contribution margin 184,600

Step-by-step explanation:

Given

Schister Systems

Total Sales $355,000

Variable expenses 213,000

Contribution margin 142,000

Fixed expenses 111,000

Net operating income $31,000

Calculated

Schister Systems

Total Sales $355,000 +(355,000*30%)= $355,000+106,500= $ 461,500

Variable expenses 213,000 + 63,900= 276,900

Contribution margin 184,600

If the sales are increased so will be the cost of goods sold increased therefore the new contribution margin will be $ 184,600

Answer 2

Total contribution margin = $184,600

Step-by-step explanation:

Contribution is the value of sales less variable cost of sales

Contribution margin= Sales revenue =- variable cost of sales

= $355,000- 213,000

=$142000

If sals increase by 30%, total contribution will also increase by the same percentage because the variable cost is linear

Total contribution margin = 130%×142000

= $184,600