Presented here is the income statement for Big Sky Incorporated for the month of February: Sales $ 60,000 Cost of goods sold 51,900 Gross profit $ 8, 100 Operating expenses 15,200 Operating loss $ (7,100) Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 19%. Required: Rearrange the preceding income statement to the contribution margin format. 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: Sales $ 60,000 Cost of goods sold 51,900 Gross profit $ 8, 100 Operating expenses 15,200 Operating loss $ (7,100) Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 19%. Required: Rearrange the preceding income statement to the contribution margin format. 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: Sales $ 60,000 Cost of goods sold 51,900 Gross profit $ 8, 100 Operating
expenses 15,200 Operating loss $ (7,100) Based on an analysis of cost behavior patterns,
it has been determined that the company's contribution margin ratio is 19%. Required:
Rearrange the preceding income statement to the contribution margin format. 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.
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