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A company has a budgeted contribution to sales (C/S) ratio of 30% and a budgeted operating profit margin of 20%. Budgeted sales were $100,000.
In month 2, actual production and sales volumes and all costs were as budgeted. The actual C/S ratio was 33% .
Which of the following statements, about the company's contribution and operating profit in month 2, is correct?
Suggested Answer: A
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29 comments · newest first
CA
Carin
7 months ago
I lean towards C. Budgeted profit is hard to surpass.
AL
Alethea
7 months ago
A makes sense. Higher C/S ratio boosts profit.
DO
Dorethea
7 months ago
D sounds interesting. Exact figures can be tricky.
MI
Miesha
7 months ago
I feel B could be true. Contribution might not rise that much.
CA
Carlene
7 months ago
Budgeted contribution was $30,000, so actual should be $33,000!
DU
Dulce
7 months ago
D seems too specific, I doubt that's the case.
HE
Helga
8 months ago
Wait, how can we be sure about the profit increase?
RE
Renay
8 months ago
I think A is the right answer. More profit for sure!
DE
Desirae
8 months ago
Option C makes the most sense to me. The higher C/S ratio means the actual contribution is less than 10% over budget.
XE
Xenia
9 months ago
Haha, this is like a trick question. I bet the accountants who wrote this are laughing at us right now.
SH
Shonda
9 months ago
Definitely C. The increased C/S ratio means the actual contribution is not a 10% increase over the budgeted amount.
AR
Aretha
9 months ago
I'm going with C. The higher C/S ratio means the actual contribution is not as much as 10% higher than budgeted.
KI
Kimberlie
9 months ago
Option C seems correct. The actual C/S ratio was 33% instead of the budgeted 30%, so the actual contribution would be less than 10% higher than budgeted.
JO
Josephine
9 months ago
I recall that if the actual C/S ratio is higher, it should lead to a higher contribution, but I can't remember how that translates to operating profit.
GE
Genevive
9 months ago
I'm a bit confused about the percentage increase. If the budgeted contribution was $30,000, how do I figure out if it's more or less than 10% higher?
GR
Graciela
10 months ago
I think I practiced a similar question where we had to compare actual and budgeted figures. If the C/S ratio increased, wouldn't that mean the contribution is higher?
CH
Cherry
10 months ago
I remember that the contribution margin affects the operating profit, but I'm not sure how to calculate the actual contribution based on the new C/S ratio.
SI
Simona
10 months ago
Alright, I've got a strategy. I'll first calculate the budgeted contribution and operating profit, then compare that to the actual figures based on the given information. That should help me determine which statement is correct.
WA
Wayne
10 months ago
Actual C/S was 33%, so contribution should be higher!
CA
Carmelina
10 months ago
I think A is correct. Higher C/S means more profit.
MA
Maia
10 months ago
I'm a bit confused by the wording of the question. I think I understand the concepts, but I want to double-check my work to make sure I'm not missing anything. This is an important exam, so I want to be sure I get it right.
GL
Gladis
11 months ago
C seems likely. Operating profit might not exceed 10%.
EL
Elena
11 months ago
Okay, let's see. The budgeted C/S ratio is 30%, and the actual C/S ratio is 33%. That's a good start, but I'll need to do some more math to determine the impact on contribution and operating profit.
CH
Christoper
11 months ago
Hmm, this seems like a tricky one. I'll need to carefully calculate the budgeted and actual contribution and operating profit to figure out which statement is correct.
EV
Evangelina
6 months ago
So, actual contribution is $3,000 more than budgeted.
CH
Christiane
6 months ago
That’s $30,000. Now for the actual contribution.
GO
Goldie
6 months ago
Right! Budgeted contribution is 30% of $100,000.
EV
Evangelina
6 months ago
I think we need to calculate the budgeted contribution first.
YU
Yuki
11 months ago
Actual contribution is 33% of $100,000, which is $33,000.