Mirabella Cosmetics manufactures and sells a face cream to small ethnic stores in the greater New York area. It presents the monthly operating income statement shown here to George Lopez, a potential investor in the business. Help Mr. Lopez under-stand Mirabella'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 2005.
3. What is the margin of safety (in units) for June 2005?
4. If sales in June were only 8,000 units and Mirabella's tax rate is 30%, calculate its net income.

Transcribed Image Text:

Mirabella Cosmetics Operating Income Statement, June 2005 3 Units Sold Revennes 5 Cost of Goods Sold Variable Manufucturing Costs 7 55,000 Fized Manufacturing Costs Total 75 25,000 9 Gross Mangin 10 Operating Costs 11 Variable Marketing Costs 12 Fioed Marketing&AdministrationCosts 10,000 3 Total Operating Costs 14 Operating Income $ 5,000 15,000