Nealon Company runs a driving range and golf shop. The budgeted income statement for the coming year is as follows.

Required:
1. What is Nealon’s variable cost ratio? Its contribution margin ratio?
2. Suppose Nealon’s actual revenues are $190,000 greater than budgeted. By how much will before-tax profits increase? Give the answer without preparing a new income statement.
3. How much sales revenue must Nealon earn in order to break even? What is the expected margin of safety? (Round your answers to the nearest dollar.)
4. How much sales revenue must Nealon generate to earn a before-tax profit of $50,000? An after-tax profit of $35,000? (Round your answers to the nearest dollar.) Prepare a contribution margin income statement to verify the accuracy of your last answer.

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Sales Less: Variable expenses Contribution margin Less: Fixed expenses Income before taxes Less: Income taxes Net income $1,240,000 781,200 $ 458,800 425,500 $ 33,300 11,655 $ 21,645