E21-31 calculating contribution margin ratio, prepare contribution margin income statements.

For its top managers, Global travel formats it's income statement as follows:

Global travel

Contribution margin income statement

Three months and it March 31, 2016

Sales revenue. $318500

Variable cost. 111475

Contrbution margin. 207025

Fixed cost. 175000

Operating income. 32025

Global so relevant range is between sales of $250,000 and $360,000.

Requirements

1. Calculate the contribution margin ratio

2. Prepare to contribution margin income statements: One at the $250,000 sales level and one at the $360,000 sales level. (Hint: the proportion of each sales dollar that goes toward variable cost is constant within the relevant range)