Question

Presented here is the income statement for Fairchild Co. for March:
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $80,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,000
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $38,000
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,000
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,000
Based on an analysis of cost behavior patterns, it has been determined that the company’s contribution margin ratio is 30%.

Required:
a. Rearrange the preceding income statement to the contribution margin format.
b. Calculate operating income if sales volume increases by 8%.
c. Calculate the amount of revenue required for Fairchild to break even.



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  • CreatedOctober 05, 2013
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