The controller of Sandoval Company prepared the following projected income statement: Sales ...............$90,000 Less: Variable costs ........72,000

Question:

The controller of Sandoval Company prepared the following projected income statement:

Sales ...............$90,000

Less: Variable costs ........72,000

Contribution margin ........ $18,000

Less: Fixed costs ...........6,900

Operating income .........$11,100

Required:

1. Calculate the Contribution margin ratio.

2. Calculate the variable cost ratio.

3. Calculate the break-even sales revenue for Sandoval.

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...