Prepare a contribution margin format income statement; calculate breakeven point Presented here is the income statement for Big Surf, Inc., for the month of May:
Sales | $ 65,000 |
Cost of goods sold | 53,500 |
Gross profit | $ 11,500 |
Operating expenses | 14,000 |
Operating loss | $ (2,500) |
Based on an analysis of cost behavior patterns, it has been determined that the company’s contribution margin ratio is 30%.
Required:
a.Rearrange the preceding income statement to the contribution margin format.
b. If sales increase by 10%, what will be the firm’s operating income?
c. Calculate the amount of revenue required for Big Surf, Inc., to break even.
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