Parts produces parts for the automobile industry. The company has monthly fixed expenses of $ 620,000 and a contribution margin of 80% of revenues.
1. Compute William’s Steel Parts’ monthly breakeven sales in dollars.
2. Project operating income (or loss) if revenues are $ 520,000 and if they are $ 1,020,000.
3. Do the results in Requirement 2 make sense given the breakeven sales you computed in
Requirement 1? Explain.