Antigonish Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $620,000 and a contribution margin of 75% of revenues. 

Requirements 

1. Compute Antigonish Steel Parts’ monthly break-even sales in dollars. Use the contribution margin ratio shortcut approach. 

2. Use the contribution margin ratio to project operating income (or loss) if revenues are $500,000 and if they are $1,030,000. 

3. Do the results in Requirement 2 make sense given the break-even sales you computed in Requirement 1? Explain.

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Check sum: (1) Break-even sales is $826,667.