The controller of Sandoval Company prepared the following projected income statement: Sales ...............$90,000 Less: Variable costs ........72,000
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The controller of Sandoval Company prepared the following projected income statement:
Sales ...............$90,000
Less: Variable costs ........72,000
Contribution margin ........ $18,000
Less: Fixed costs ...........6,900
Operating income .........$11,100
Required:
1. Calculate the Contribution margin ratio.
2. Calculate the variable cost ratio.
3. Calculate the break-even sales revenue for Sandoval.
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...
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Related Book For
Cornerstones of Managerial Accounting
ISBN: 978-0324660135
3rd Edition
Authors: Mowen, Hansen, Heitger
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