Cost - Volume - Profit Analysis
Arrange Contribution margin income statements.
Western Travel uses contribution margin income statement inside. Western's first-quarter results are as given:
Western Travel
Contribution Margin Income Statement
Three months Ended March 31
Sales Revenue.................................................. $500,000
Less Variable expenses................................... $100,000
____________
Contribution margin....................................... $400,000
Less: Fixed expenses...................................... $174,000
____________
Operating income........................................... $226,000
Western's relevant range is sales of between $100,000 and $700,000.
Requirements:
1. Create contribution margin income statements at sales level of $255,000 and $363,000.
2. Calculate breakeven sales in dollars