Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable

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Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense).

Required:

1. Calculate the sales revenue that Chillmax must make to earn operating income of $81,900 by using the point in sales equation.

2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1.

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...
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Managerial Accounting The Cornerstone of Business Decision Making

ISBN: 978-1337115773

7th edition

Authors: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

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