Schister Systems uses the following data in its Cost-Volume-Profit analyses:
Total Sales $355,000
Variable expenses 213,000
Contribution margin 142,000
Fixed expenses 111,000
Net operating income $31,000
Required:
1. What is total contribution margin if sales volume increases by 30%?

Total contribution margin   = $184,600

Explanation:

Contribution is the value of sales less variable cost of sales

Contribution margin= Sales revenue =- variable cost of sales

                                  = $355,000- 213,000

                                  =$142000

If sals increase by 30%, total contribution will also increase by the same percentage because the variable cost is linear

Total contribution margin = 130%×142000

                                             = $184,600

Contribution margin 184,600

Explanation:

Given

Schister Systems

Total Sales $355,000

Variable expenses 213,000

Contribution margin 142,000

Fixed expenses 111,000

Net operating income $31,000

Calculated

Schister Systems

Total Sales $355,000 +(355,000*30%)= $355,000+106,500= $ 461,500

Variable expenses 213,000 + 63,900= 276,900

Contribution margin 184,600

If the sales are increased so will be the cost of goods sold increased therefore the new contribution margin will be $ 184,600

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