Answer
(N-1)
Revenues 1,800 × 50% CM% = 900 Contribution Margin.
Revenues 1,800 - 900 Contribution Margin = 900 Variable Costs
(N-2) 900 Variable Costs + 400 fixed costs = 1,300 total costs
(N-3) Contribution margin 900 - Fixed costs 400 = 500 Operating income
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
CM = Contribution Margin
FC = Fixed Costs
