Presenting below is the income statement for Chauncey\'s Firm for the month of A
ID: 2419173 • Letter: P
Question
Presenting below is the income statement for Chauncey's Firm for the month of April: Sales 110,000 Cost of goods sold 57,000 gross profit 53,000 Operating expenses 38,000 operating income 15,000 Based on the analysis of cost behavior patterns, it has been determined that the company's contribution margin rations is 30% a Rearrange the above income statement to the contribution margin format b if sales increase by 20 percent, what will be the firms 'operating income? c Calculate the amount of revenue for Chauncey's Firm to break even
Explanation / Answer
Sales $110,000
less:Varibale cost (70%) 77,000
Contribution margin(110,000@30%) 33,000
Less:Fixed cost (18,000)
Operating profit $15,000
B)
Sales(110,000@120%) $132,000
less:Variable cost @70% 92,400
Contribution $39,600
Less:Fixed cost (18,000)
Profit $21,600
c)
BEP (dollars) = Fixed cost / contributon margin ratio
= 18,000/30%
= $60,000
Sales $110,000
less:Varibale cost (70%) 77,000
Contribution margin(110,000@30%) 33,000
Less:Fixed cost (18,000)
Operating profit $15,000