X Company, a merchandiser, had the following income statement for 2018: Sales $176,680 Cost of goods...
X Company, a merchandiser, had the following income statement for 2018: Sales $176,680 Cost of goods sold 106,064 Gross margin $70,616 Other operating expenses 49,512 Profit $21,104 $90,864 of the cost of goods sold were variable, and $32,812 of the other operating expenses were variable. If cost behavior in 2019 is expected to continue as it did in 2018, what must total sales be in 2019 in order for X Company to break even?
Homework Answers
To break even contribution should be equal to fixed assets or in other words sales amount should be equal to total sales. Hence
Sales = variable + fixed cost = cost of goods sold + other operating expense
= $106064 + $49512
= $155576
In absence of any other information it is assumed that sold units are same in both the years.
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$
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Beginning merchandise inventory
$
31,000
Purchases
$
310,000
Ending merchandise inventory
$
15,500
Fixed selling expense
$
?
Fixed administrative expense
$
18,600
Variable selling expense
$
23,250
Variable administrative expense
$
?
Contribution margin
$
93,000
Net operating income
$
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