Presented here is the income statement for Fairchild Co. for March: Sales $ 81,500 Cost of goods sold 43,000 Gross profit $ 38,500 Operating expenses 31,000 Operating income $ 7,500 Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 34%. Required: Rearrange the preceding income statement to the contribution margin format. Calculate operating income if sales volume increases by 10%. Calculate the amount of revenue required for Fairchild to break even.
Presented here is the income statement for Fairchild Co. for March: Sales $ 81,500 Cost of goods sold 43,000 Gross profit $ 38,500 Operating expenses 31,000 Operating income $ 7,500 Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 34%. Required: Rearrange the preceding income statement to the contribution margin format. Calculate operating income if sales volume increases by 10%. Calculate the amount of revenue required for Fairchild to break even.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Presented here is the income statement for Fairchild Co. for March:
| Sales | $ | 81,500 | |
| Cost of goods sold | 43,000 | ||
| Gross profit | $ | 38,500 | |
| Operating expenses | 31,000 | ||
| Operating income | $ | 7,500 | |
Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 34%.
Required:
- Rearrange the preceding income statement to the contribution margin format.
- Calculate operating income if sales volume increases by 10%.
- Calculate the amount of revenue required for Fairchild to break even.
rev: 10_17_2020_QC_CS-236193
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