Question

Jule. UUIU PIS тоот (ОСОпрее) с hW Slule. U70, U UI 12 pts O E7-25A (similar to) Question Help Griffin's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $650,000 and a contribution margin of 85% of revenues. Read the requirements. Requirement 1. Compute Griffin's Steel Parts' monthly breakeven sales in dollars. Begin by identifying the formula. 1 = Breakeven sales in dollars i Requirements 1. Compute Griffin's Steel Parts' monthly breakeven sales in dollars. 2. Use the contribution margin ratio to project operating income (or loss) if revenues are $530,000 and if they are $1,000,000. 3. Do the results in Requirement 2 make sense given the breakeven sales you computed in Requirement 1? Explain. Print Done

Answer 1

1
	Break-even sales in dollars =Fixed Costs / Contribution margin ratio
	Break-even sales in dollars =$650,000 / 85% =$764,706
2		Case 1	Case 2
	Revenues	$      5,30,000	$      10,00,000
	Contribution margin(85% of Revenues)	$      4,50,500	$        8,50,000
	Less:Fixed Costs	$      6,50,000	$        6,50,000
	Operating Income	$     -1,99,500	$        2,00,000
3	The results obtained in Result signifies that the Break-even dollars of $764,706 is within the range of $530,000 and $1,000,000