Western Travel uses the contribution margin income statement internally. Western's first-quarter results are as follows:
WESTERN TRAVEL
contribution margin Income Statement
Three Months Ended March 31
Sales revenue............................................................................................$500,000
Less: Variable expenses.............................................................................100,000
contribution margin................................................................................$400,000
Less: Fixed expenses.................................................................................174,000
Operating income.....................................................................................$226,000
Western's relevant range is sales of between $100,000 and $700,000.
Requirements
1. Prepare contribution margin income statements at sales levels of $255,000 and $363,000.
2. Compute breakeven sales in dollars.