Presented here is the income statement for Big Sky Incorporated for the month of February: $ 61,000 53,600 $ 7,400 14,000 $ (6,600) Sales Cost of goods sold Gross profit Operating expenses Operating loss Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 18%. Required: a. Rearrange the preceding income statement to the contribution margin format. b. If sales increase by 10%, what will be the firm's operating income (or loss)? Calculate the amount of revenue required for Big Sky to break even
Presented here is the income statement for Big Sky Incorporated for the month of February: $ 61,000 53,600 $ 7,400 14,000 $ (6,600) Sales Cost of goods sold Gross profit Operating expenses Operating loss Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 18%. Required: a. Rearrange the preceding income statement to the contribution margin format. b. If sales increase by 10%, what will be the firm's operating income (or loss)? Calculate the amount of revenue required for Big Sky to break even
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Presented here is the income statement for Big Sky Incorporated for the month of February:
$ 61,000
53,600
$ 7,400
14,000
$ (6,600)
Sales
Cost of goods sold
Gross profit
Operating expenses
Operating loss
Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 18%.
Required:
a. Rearrange the preceding income statement to the contribution margin format.
b. If sales increase by 10%, what will be the firm's operating income (or loss)?
c. Calculate the amount of revenue required for Big Sky to break even.
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