Answer
(N-1) 700 operating income +400 fixed costs = 1,100 Contribution Margin.
(N-2) Revenues $2,400 - Contribution margin 1,100 = 1,300 Variable Costs
(N-3) Variable costs 1,300 + 400 Fixed Costs = 1,700 Total Costs
(N-4) Contribution Margin 1,100 / Revenues 2,400 = 45.8% Contribution Margin %
Work Step by Step
This question requires working backward through the income statement to find out missing figures.
As we know, in CVP analysis, fixed costs are separated from cost of sales and treated as a period costs. Therefore, we shall use contribution margin income statement format to solve this problem.
