Question 2

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The following CVP income statements are available for Blanc Company and Noir Company.

		Blanc Company		Noir Company
Sales		$ 530,000		$ 530,000
Variable costs		318,000		265,000
Contribution margin		212,000		265,000
Fixed costs		203,520		256,520
Net income		$ 8,480		$ 8,480

Calculate Contribution margin ratio. (Round answers to 2 decimal places, e.g. 0.32.)

		Contribution Margin Ratio
Blanc Company
Noir Company

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Compute the break-even point in dollars for each company. (Round answers to 0 decimal places, e.g. 5,125.)

		Break-even Point
Blanc Company		$
Noir Company		$

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Compute margin of safety ratio for each company. (Round answers to 3 decimal places, e.g. 0.321.)

		Margin of Safety Ratio
Blanc Company
Noir Company

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Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e.g. 1.56.)

		Degree of Operating Leverage
Blanc Company
Noir Company

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Assuming that sales revenue increases by 20%, prepare a CVP income statement for each company. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		Blanc Company		Noir Company
Total Variable ExpensesTotal Fixed ExpensesCost of Goods SoldSelling ExpensesGross ProfitVariable CostsAdministrative ExpensesSalesNet Income/(Loss)Fixed CostsContribution Margin		$		$
Total Variable ExpensesAdministrative ExpensesFixed CostsSalesSelling ExpensesGross ProfitNet Income/(Loss)Cost of Goods SoldTotal Fixed ExpensesContribution MarginVariable Costs
Total Fixed ExpensesVariable CostsNet Income/(Loss)Gross ProfitFixed CostsTotal Variable ExpensesSelling ExpensesSalesAdministrative ExpensesContribution MarginCost of Goods Sold
SalesCost of Goods SoldNet Income/(Loss)Selling ExpensesContribution MarginTotal Fixed ExpensesFixed CostsGross ProfitAdministrative ExpensesVariable CostsTotal Variable Expenses
Contribution MarginSelling ExpensesAdministrative ExpensesNet Income/(Loss)Fixed CostsTotal Fixed ExpensesGross ProfitVariable CostsSalesTotal Variable ExpensesCost of Goods Sold		$		$

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Assuming that sales revenue decreases by 20%, prepare a CVP income statement for each company. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		Blanc Company		Noir Company
Cost of Goods SoldNet Income/(Loss)Fixed CostsContribution MarginGross ProfitAdministrative ExpensesVariable CostsSalesTotal Fixed ExpensesSelling ExpensesTotal Variable Expenses		$		$
Administrative ExpensesTotal Variable ExpensesFixed CostsSelling ExpensesCost of Goods SoldGross ProfitVariable CostsContribution MarginNet Income/(Loss)SalesTotal Fixed Expenses
Gross ProfitFixed CostsTotal Fixed ExpensesSelling ExpensesAdministrative ExpensesContribution MarginTotal Variable ExpensesCost of Goods SoldVariable CostsNet Income/(Loss)Sales
Contribution MarginTotal Variable ExpensesNet Income/(Loss)Selling ExpensesVariable CostsTotal Fixed ExpensesGross ProfitAdministrative ExpensesSalesFixed CostsCost of Goods Sold
Fixed CostsCost of Goods SoldSelling ExpensesTotal Variable ExpensesSalesAdministrative ExpensesNet Income/(Loss)Variable CostsGross ProfitContribution MarginTotal Fixed Expenses		$		$

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