Prepare a contribution margin format income statement; calculate break-even point Presented here is the income statement for Edwards Co. for February:
Sales | $80,000 |
Cost of goods sold | 48,000 |
Gross profit | $32,000 |
Operating expenses | 21,200 |
Operating income | $10,800 |
Based on an analysis of cost behavior patterns, it has been determined that the company’s contribution margin ratio is 35%.
Required:
a.Rearrange the preceding income statement to the contribution margin format.
b. Calculate operating income if sales volume increases by 20%. (Note: Do not construct an income statement to get your answer.)
c. Calculate the amount of revenue required for Edwards to break even.
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