Erin Shelton, Incorporated, wants to earn a target profit of $930,000 this year. The company's fixed costs are expected to be $1,260,000 and its variable costs are expected to be 60 percent of sales. Erin Shelton, Incorporated, earned $830,000 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 $930,000.
Erin Shelton, Incorporated, wants to earn a target profit of $930,000 this year. The company's fixed costs are expected to be $1,260,000 and its variable costs are expected to be 60 percent of sales. Erin Shelton, Incorporated, earned $830,000 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 $930,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![4:24
ces
M Question Mode: M...
E6-24 (Algo) Computing Target Profit, Preparing Contribution Margin Income Statement, Computing
Margin of Safety [LO 6-2, 6-3]
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 $930,000.
4. Prepare a contribution margin income statement based on sales required to earn a target profit of $930,000.
5. When the company earns $930,000 of net income, what is its margin of safety and margin of safety as a percentage of sales?
Erin Shelton, Incorporated, wants to earn a target profit of $930,000 this year. The company's fixed costs are expected to be
$1,260,000 and its variable costs are expected to be 60 percent of sales. Erin Shelton, Incorporated, earned $830,000 in profit last
year.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Break-Even Sales
Calculate break-even sales for Erin Shelton, Incorporated.
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Transcribed Image Text:4:24
ces
M Question Mode: M...
E6-24 (Algo) Computing Target Profit, Preparing Contribution Margin Income Statement, Computing
Margin of Safety [LO 6-2, 6-3]
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 $930,000.
4. Prepare a contribution margin income statement based on sales required to earn a target profit of $930,000.
5. When the company earns $930,000 of net income, what is its margin of safety and margin of safety as a percentage of sales?
Erin Shelton, Incorporated, wants to earn a target profit of $930,000 this year. The company's fixed costs are expected to be
$1,260,000 and its variable costs are expected to be 60 percent of sales. Erin Shelton, Incorporated, earned $830,000 in profit last
year.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Break-Even Sales
Calculate break-even sales for Erin Shelton, Incorporated.
67 AUG
Required 4
74
Saved
< Required 1
Required 5
< Prev
Required 2 >
tv
4 of 4
¯¯
Next >
gnmiddlewat.
THAO
Help
Save &
C
B
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