# Cost volume profit analysis problem

#### Qonzo

Hey guys, Woo here.

For a while now, I have been stuck on this particular question and I don't know how to start it let alone find the solution to each question. I was just wondering if someone can guide me to the right way to finding each answer to each question.
Rather than posting my whole assignment I will put down just one question in hopes that the formulas will be helpful.

Sales revenue \$710,000
Variable costs ?
Fixed costs ?
Operating income \$13,800
Units sold 190,000
Contribution margin per unit \$1.42
Contribution margin ratio ?

Thanks again for help guys,
Woo

#### ArcSine

• From Sales Revenue and Units Sold you can derive the selling price per unit ("SPPU").

• From SPPU and Contribution Margin Per Unit ("CMPU") you can derive Variable Cost Per Unit ("VCPU").

• From SPPU and CMPU comes the Contribution Margin Ratio.

• From VCPU and Units Sold you get Variable Costs.

• Then finally from Sales, Variable Costs, and Operating Income you get Fixed Costs.

Whip out the ol' calculator and give it a go.

#### Qonzo

Thank you so much! It helps alot haha. I was stuck on how to find variable cost for 3hrs at one point! Thanks again ))

#### Qonzo

Just another bit that I'm confused with is finding the sales re
venue in this part.
Sales revenue ?
Variable costs 150000
Fixed costs 121000
Operating income ?
Units sold 10000
Contribution (CMpu) ?
Contribution margin ratio 0.20

#### ArcSine

If SR, TVC, and CM denote, respectively, Sales Revenue, Total Variable Costs, and Contribution Margin Ratio, then

CM = (SR - TVC) / SR

Given any two of the three you can solve for the third.

#### Qonzo

So correct me if this wrong.

SR=150,000/.8
SR=187,500

then,

CM=(187,500-150,000)/187,500
=0.20

#### ArcSine

Correct. Nice touch verifying your answer by checking it in the CM formula, by the way. Always do that whenever feasible.

#### Qonzo

ha-ha thanks for that. The only final thing I don't understand now is.

How do you work out the units sold?

Sales revenue \$600,000
Variable Costs 288,000
Fixed Costs 139,000
Operating Income 173,000
Units Sold ?
CPpu \$97.50
CM 0.52?

#### Qonzo

Also since you helped me this far would it be possible for you to look over my questions that I did so far? Just to see if I'm doing it correctly.

#### ArcSine

I'm not sure what the "CPpu" refers to exactly, but it appears to be something expressed on a per-unit basis. If so, you can find the number of units using this per-unit value, along with some other info from the furnished data.

For example, if the \$97.50 represents the unit contribution amount (unit sales price less the unit variable cost) you could derive the total units sold from the \$97.50 along with the total sales revenue and total variable cost numbers.

And yeah, if you wanna put your answers up in a post, I'm sure somebody will be happy to give 'em a once-over. In a forum, of course, it all depends on who happens to be visiting at the moment.

Have a good weekend, amigo.