Erin Shelton, Inc., wants to earn a target profit of $850,000 this year. The company's fixed costs are expected to be $1,100,000 and its variable costs are expected to be 60 percent of sales. Erin Shelton, Inc., earned $750,000 in profit last year. Required: 1. Calculate break-even sales for Erin Shelton, Inc. 2. Prepare a contribution margin income statement on the basis break-even sales. 3. Calculate the required sales to meet the target profit of $850,000. A Dronn
Erin Shelton, Inc., wants to earn a target profit of $850,000 this year. The company's fixed costs are expected to be $1,100,000 and its variable costs are expected to be 60 percent of sales. Erin Shelton, Inc., earned $750,000 in profit last year. Required: 1. Calculate break-even sales for Erin Shelton, Inc. 2. Prepare a contribution margin income statement on the basis break-even sales. 3. Calculate the required sales to meet the target profit of $850,000. A Dronn
Chapter1: Financial Statements And Business Decisions
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Erin Shelton, Inc., wants to earn a target profit of $850,000 this year. The company's fixed costs are expected to be $1,100,000 and its
variable costs are expected to be 60 percent of sales. Erin Shelton, Inc., earned $750,000 in profit last year.
Required:
1. Calculate break-even sales for Erin Shelton, Inc.
2. Prepare a contribution margin income statement on the basis break-even sales.
3. Calculate the required sales to meet the target profit of $850,000.
4. Prepare a contribution margin income statement based on sales required to earn a target profit of $850,000.
5. When the company earns $850,000 of net income, what is its margin of safety and margin of safety as a percentage of sales?
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