SAB Company has the following income statement:
Revenues $100,000
Variable Costs 40,000
Contribution Margin 60,000
Fixed Costs 30,000
Operating Income 30,000
1. If SAB's sales increase by $20,000 solely due to an increase in the units sold, what will be the company's operating income?
2. If SAB's sales increase by $20,000 and the increase is due solely to an increase in the price of the company's operating income?
3. Assume that SAB's sales consist of a large number of products, each with varying contributions margins. Also, assume that the sales mix from year to year remains relatively constant. Using the gross contribution margin percentage approach, what is the level of revenue necessary for SAB to break even?