Jackson Company recently calculated its break-even sales revenue to be $15,000. For each dollar of sales revenue,

Question:

Jackson Company recently calculated its break-even sales revenue to be $15,000. For each dollar of sales revenue, $0.70 goes to cover variable costs.

Compute the following:

a. The contribution margin ratio.

b. Total fixed costs.

c. The sales revenue that would have to be generated to earn an operating income of $9,000.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...