Juicy Beauty manufactures and sells a face cream to small specialty stores in the greater Los Angeles area. It presents the monthly operating income statement shown here to George Lopez, a potential investor in the business. Help Mr. Lopez understand Juicy Beauty's cost structure.

Required
1. Recast the income statement to emphasize contribution margin.
2. Calculate the contribution margin percentage and breakeven point in units and revenues for
June 2017.
3. What is the margin of safety (in units) for June 2017?
4. If sales in June were only 16,000 units and Juicy Beauty's tax rate is 30%, calculate its net income.

Transcribed Image Text:

Juicy Beau Operating Income Statement June, 2017 3 Units sold 4 Revenues 5 Cost of goods sold 6 Variable manufacturing costs 7 Fixed manufacturing costs 8 9 Gross margin 10 Operating costs 11 Variable marketing costs 12 Fixed marketing & admin costs 13 4 Operating income 20,000 $200,000 $110,000 40,000 Total cost of goods sold 150,000 50,000 $10,000 20,000 Total operating costs 30,000 20,000