Problem 12-23 (Algo) Prepare a contribution margin format income statement; calculate break-even point LO 7, 8, 9, 11 Presented here is the income statement for Big Shot Inc. for the month of May: Sales $ 61,000 Cost of goods sold 53,200 Gross profit $ 7,800 Operating expenses 15,900 Operating loss $ (8,100 ) Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 17%. 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 Shot to break even.
Problem 12-23 (Algo) Prepare a contribution margin format income statement; calculate break-even point LO 7, 8, 9, 11 Presented here is the income statement for Big Shot Inc. for the month of May: Sales $ 61,000 Cost of goods sold 53,200 Gross profit $ 7,800 Operating expenses 15,900 Operating loss $ (8,100 ) Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 17%. 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 Shot to break even.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 12-23 (Algo) Prepare a contribution margin format income statement; calculate break-even point LO 7, 8, 9, 11
Presented here is the income statement for Big Shot Inc. for the month of May:
| Sales | $ | 61,000 | |
| Cost of goods sold | 53,200 | ||
| Gross profit | $ | 7,800 | |
| Operating expenses | 15,900 | ||
| Operating loss | $ | (8,100 | ) |
Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 17%.
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 Shot to break even.
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