Presented here is the income statement for Big Surf, Inc , for the month of May Sales $ 65,000 Cost of goods sold 53,500 Gross profit $ 11,500 Operating expenses 14,000 Operating loss $ (2,500) Based on an analysis of cost behavior patterns, it has been determined that the companys contribution margin ratio is 30 Required a Rearrange the preceding income statement to the contribution margin format b If sales increase by 10 , what will be the firms operating income c Calculate the amount of revenue required for Big Surf, Inc , to break even

Question: Presented here is the income statement for Big Surf, Inc., for the month of May: Sales . . . . . . . . .

Presented here is the income statement for Big Surf, Inc., for the month of May:
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 65,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,500
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,500
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000
Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,500)
Based on an analysis of cost behavior patterns, it has been determined that the company’s ratio is 30%.
Required:
a. Rearrange the preceding income statement to the format.
b. If sales increase by 10%, what will be the firm’s operating income?
c. Calculate the amount of revenue required for Big Surf, Inc., to break even.

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