Pluto Travel

Contribution Margin Income Statement

Three Months Ended March 31, 2016

Net Sales Revenue

$318,500

Variable Costs

111,475

Contribution Margin

207,025

Fixed Costs

170,000

Operating Income

$37,025

For its top managers, Pluto Travel formats its income statement as follows: Pluto's relevant range is between sales of $256,000 and $362,000.

1.	Calculate the contribution margin ratio.
2.	Prepare two contribution margin income statements: one at the $256,000 sales level and one at the $362,000 sales level. (Hint: The proportion of each sales dollar that goes toward variable costs is constant within the relevant range.)