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%?

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

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