3a. Prepare an income statement for Andrews Sporting Goods, Inc. for the coming year. Andrews Sporting Goods Inc. Income Statement For the Coming Year Line Item Description Sales Total variable cost Contribution margin Total fixed cost Operating income Amount 570,00 318,00 252,00 147,00 105,00
3a. Prepare an income statement for Andrews Sporting Goods, Inc. for the coming year. Andrews Sporting Goods Inc. Income Statement For the Coming Year Line Item Description Sales Total variable cost Contribution margin Total fixed cost Operating income Amount 570,00 318,00 252,00 147,00 105,00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Part 3a: Income Statement
3a. Prepare an income statement for Andrews Sporting Goods, Inc. for the coming year.
Andrews Sporting Goods Inc.
Income Statement
For the Coming Year
Line Item Description
Sales
Total variable cost
Contribution margin
Total fixed cost
Operating income
Amount
570,00
318,00
252,00
147,00
105,00
Transcribed Image Text:Part 3b: Contribution Margin Ratio and Part 4: Margin of Safety
3b. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. (Note: Round the contribution margin ratio to the nearest whole percent; round the break-
even sales revenue to the nearest dollar.)
Overall contribution margin ratio
Overall break-even sales revenue
4. Compute the margin of safety for the coming year in sales dollars.
$ 237,496 X
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332,504
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3b. Divide total contribution margin by sales. Divide total fixed costs by contribution margin ratio.
4. Compute the difference between expected sales and break-even sales.
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