The controller of Pelley Company prepared the following projected income statement Sales $95,000 Total variable cost 68,400 Contribution margin $26,600 Total fixed cost 14,000 Operating income $12,600 Required 1 Calculate the Contribution margin ratio 2 Calculate the variable cost ratio 3 Calculate...

1 Contribution Margin Ratio Contribution Margin Sales ...

The controller of Pelley Company prepared the following projected income statement: Sales $95,000 Total variable cost .............68,400

Question:

The controller of Pelley Company prepared the following projected income statement:
Sales $95,000
Total variable cost .............68,400
.........$26,600
Total fixed cost ................14,000
Operating income ............$12,600
Required:
1. Calculate the ratio.
2. Calculate the variable cost ratio.
3. Calculate the break-even sales revenue for Pelley.
4. How could Pelley increase projected operating income without increasing the total sales revenue?
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...