Kincaid Company sells flags with team logos. Kincaid has fixed costs of $583,200 per year plus variable costs of $4.80 per flag. Each and every flag sells for $12.00.
Requirements:
a) Use the income statement equation approach to calculate the number of flags Kincaid should sell each year to break even.
b) Use the contribution margin ratio CVP formula to calculate the dollar sales Kincaid requires earning $33,000 in operating income for 2012. (Round the contribution margin to two decimal places.)
c) Make Kincaid's contribution margin income statement for the year ended December 31, 2012, for sales of 72,000 flags. Cost of goods sold is 70% of variable costs. Operating costs make up the rest of variable costs and all of fixed costs.