E6-24 (Algo) Computing Target Profit, Preparing Contribution Margin Income Statement, Computing Margin of Safety [LO 6-2, 6-3] Erin Shelton, Incorporated, wants to earn a target profit of $880,000 this year. The company's fixed costs are expected to be $1,160,000 and its variable costs are expected to be 60 percent of sales. Erin Shelton, Incorporated, earned $780,000 in profit last year. Required: 1. Calculate break-even sales for Erin Shelton, Incorporated. 2. Prepare a contribution margin income statement on the basis of break-even sales. 3. Calculate the required sales to meet the target profit of $880,000. 4. Prepare a contribution margin income statement based on sales required to earn a target profit of $880,000. 5. When the company earns $880,000 of net income, what is its margin of safety and margin of safety as a percentage of sales? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Calculate break-even sales for Erin Shelton, Incorporated. Break-Even Sales
E6-24 (Algo) Computing Target Profit, Preparing Contribution Margin Income Statement, Computing Margin of Safety [LO 6-2, 6-3] Erin Shelton, Incorporated, wants to earn a target profit of $880,000 this year. The company's fixed costs are expected to be $1,160,000 and its variable costs are expected to be 60 percent of sales. Erin Shelton, Incorporated, earned $780,000 in profit last year. Required: 1. Calculate break-even sales for Erin Shelton, Incorporated. 2. Prepare a contribution margin income statement on the basis of break-even sales. 3. Calculate the required sales to meet the target profit of $880,000. 4. Prepare a contribution margin income statement based on sales required to earn a target profit of $880,000. 5. When the company earns $880,000 of net income, what is its margin of safety and margin of safety as a percentage of sales? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Calculate break-even sales for Erin Shelton, Incorporated. Break-Even Sales
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![E6-24 (Algo) Computing Target Profit, Preparing Contribution Margin Income Statement, Computing
Margin of Safety [LO 6-2, 6-3]
Erin Shelton, Incorporated, wants to earn a target profit of $880,000 this year. The company's fixed costs are expected to be
$1,160,000 and its variable costs are expected to be 60 percent of sales. Erin Shelton, Incorporated, earned $780,000 in profit last
year.
Required:
1. Calculate break-even sales for Erin Shelton, Incorporated.
2. Prepare a contribution margin income statement on the basis of break-even sales.
3. Calculate the required sales to meet the target profit of $880,000.
4. Prepare a contribution margin income statement based on sales required to earn a target profit of $880,000.
5. When the company earns $880,000 of net income, what is its margin of safety and margin of safety as a percentage of sales?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Required 4
Required 5
Calculate break-even sales for Erin Shelton, Incorporated.
Break-Even Sales
< Required 1
Required 2 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdc115c4e-9568-40b2-b2c4-d0fc491a212c%2F7e31addf-e961-4b00-ad94-89b88011485b%2Fqf5ibdf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:E6-24 (Algo) Computing Target Profit, Preparing Contribution Margin Income Statement, Computing
Margin of Safety [LO 6-2, 6-3]
Erin Shelton, Incorporated, wants to earn a target profit of $880,000 this year. The company's fixed costs are expected to be
$1,160,000 and its variable costs are expected to be 60 percent of sales. Erin Shelton, Incorporated, earned $780,000 in profit last
year.
Required:
1. Calculate break-even sales for Erin Shelton, Incorporated.
2. Prepare a contribution margin income statement on the basis of break-even sales.
3. Calculate the required sales to meet the target profit of $880,000.
4. Prepare a contribution margin income statement based on sales required to earn a target profit of $880,000.
5. When the company earns $880,000 of net income, what is its margin of safety and margin of safety as a percentage of sales?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Required 4
Required 5
Calculate break-even sales for Erin Shelton, Incorporated.
Break-Even Sales
< Required 1
Required 2 >
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education