Break-Even in Sales Revenue, Changes in Variables Carmichael Corporation is in the process of preparing next year's budget. The pro forma income statement for the current year is $1,800,000 Sales Cost of sales: Direct materials Direct labor Variable overhead Fixed overhead Gross profit $250,000 180,000 106,000 100,000 636,000 $1,164,000

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Break-Even in Sales Revenue, Changes in Variables
Carmichael Corporation is in the process of preparing next year's budget. The pro forma income statement for the current year is as follows:
$1,800,000
Sales
Cost of sales:
Direct materials
Direct labor
Variable overhead
Fixed overhead
Gross profit
Selling and administrative expenses:
Variable
Fixed
Operating income
$250,000
180,000
106,000
100,000
$400,000
350,000
636,000
$1,164,000
750,000
$414,000
Transcribed Image Text:Break-Even in Sales Revenue, Changes in Variables Carmichael Corporation is in the process of preparing next year's budget. The pro forma income statement for the current year is as follows: $1,800,000 Sales Cost of sales: Direct materials Direct labor Variable overhead Fixed overhead Gross profit Selling and administrative expenses: Variable Fixed Operating income $250,000 180,000 106,000 100,000 $400,000 350,000 636,000 $1,164,000 750,000 $414,000
Required:
1. What is the break-even sales revenue for Carmichael Corporation for the current year? In your calculations, carry the contribution margin ratio to
two decimal places.
$
2. For the coming year, the management of Carmichael Corporation anticipates an 8 percent increase in variable costs and a $60,000 increase in fixed
expenses. What is the break-even point in dollars for next year? In your computation, round the contribution margin ratio to four decimal places.
Round your final answer to the nearest dollar. (CMA adapted)
Transcribed Image Text:Required: 1. What is the break-even sales revenue for Carmichael Corporation for the current year? In your calculations, carry the contribution margin ratio to two decimal places. $ 2. For the coming year, the management of Carmichael Corporation anticipates an 8 percent increase in variable costs and a $60,000 increase in fixed expenses. What is the break-even point in dollars for next year? In your computation, round the contribution margin ratio to four decimal places. Round your final answer to the nearest dollar. (CMA adapted)
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