Question

Presented here is the income statement for Fairchild Co. for March: Sales $ 84,000 Cost of...

Presented here is the income statement for Fairchild Co. for March:

Sales $ 84,000
Cost of goods sold 40,000
Gross profit $ 44,000
Operating expenses 31,500
Operating income $ 12,500

Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 33%.

Required:

a. Rearrange the preceding income statement to the contribution margin format.

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b. Calculate operating income if sales volume increases by 10%. (Do not round intermediate calculations.)

c. Calculate the amount of revenue required for Fairchild to break-even.

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Answer #1

a. Contribution margin format Sales 84,000 Less: Variable expenses 56,280 ($ 84,000 * 67%) Contribution Margin 27,720 Less: F

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