Sales Needed to Earn Target Income Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Chillmax must make to earn operating income of $81,900 by using the point in sales equation. 2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1. Enter amounts as positive numbers. Chillmax Company Contribution Margin Income Statement At Point in Sales for Target Income Total Sales Total variable cost Total contribution margin Total fixed cost Operating income

Sales Needed to Earn Target Income Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Chillmax must make to earn operating income of $81,900 by using the point in sales equation. 2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1. Enter amounts as positive numbers. Chillmax Company Contribution Margin Income Statement At Point in Sales for Target Income Total Sales Total variable cost Total contribution margin Total fixed cost Operating income

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Description: Sales Needed to Earn Target IncomeChillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price.Total fixed cost equals $78,000 (includes fi

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Sales Needed to Earn Target Income
Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price.
Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense).
Required:
1. Calculate the sales revenue that Chillmax must make to earn operating income of $81,900 by using the point in sales equation. $
2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1. Enter amounts as positive numbers.
Chillmax Company
Contribution Margin Income Statement
At Point in Sales for Target Income
Total
Sales
Total variable cost
Total contribution margin
Total fixed cost
Operating income

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