Presented here is the income statement for Fairchild Co. for March: Based on an

Question

Presented here is the income statement for Fairchild Co. for March:

Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 33%.

Required:

a. Rearrange the preceding income statement to the contribution margin format.

b. Calculate operating income if sales volume increases by 10%. (Do not round intermediate calculations.)

c. Calculate the amount of revenue required for Fairchild to break-even.

Sales $ 83,500 Cost of goods sold 43,000 Gross profit $ 40,500 Operating expenses 30,500 Operating income $ 10,000

Explanation / Answer

a)

b)

c)

Sales $ 83,500 Less: Variable expenses ($83,500*77%) $ 64,295 Contribution margin $ 19,205 Less: Fixed cost ($19,205-$10,000) $    9,205 Net income $ 10,000

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