Chapter 4 answers
Exercise 4-13 (20 minutes) | | Total | Per Unit | 1. | Sales (20,000 units × 1.15 = 23,000 units) | $345,000 | $ 15.00 | | Variable expenses | 207,000 | 9.00 | | Contribution margin | 138,000 | $ 6.00 | | Fixed expenses | 70,000 | | | Net operating income | $ 68,000 | | | | | | 2. | Sales (20,000 units × 1.25 = 25,000 units) | $337,500 | $13.50 | | Variable expenses | 225,000 | 9.00 | | Contribution margin | 112,500 | $ 4.50 | | Fixed expenses | 70,000 | | | Net operating income | $ 42,500 | | | | | | 3. | Sales (20,000 units × 0.95 = 19,000 units) | $313,500 | $16.50 | | Variable expenses | 171,000 | 9.00 | | Contribution margin | 142,500 | $ 7.50 | | Fixed expenses | 90,000 | | | Net operating income | $ 52,500 | | | | | | 4. | Sales (20,000 units × 0.90 = 18,000 units) | $302,400 | $16.80 | | Variable expenses | 172,800 | 9.60 | | Contribution margin | 129,600 | $ 7.20 | | Fixed expenses | 70,000 | | | Net operating income | $ 59,600 | |

Exercise 4-18 (30 minutes) 1. | Profit | = Unit CM × Q − Fixed expenses | | $0 | = ($30 − $12) × Q − $216,000 | | $0 | = ($18) × Q − $216,000 | | $18Q | = $216,000 | | Q | = $216,000 ÷ $18 | | Q | = 12,000 units, or at $30 per unit, $360,000 |

Alternative solution:

2. The contribution margin is $216,000 because the contribution margin is equal to the fixed expenses at the break-even point.

3. | |

| | Total | Unit | | Sales (17,000 units × $30 per unit) | $510,000 | $30 | | Variable expenses
(17,000 units × $12 per unit) | 204,000 | 12 | | Contribution margin | 306,000 | $18 | | Fixed expenses | 216,000 | | | Net operating income | $