Problem
Presented below is the income statement for Ackee Food Center for the month of July:
Sales $1,280,000
Cost of goods sold 1,180,000
Gross profit $100,000
Operating expenses 64,000
Operating income $36,000
Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 15 percent.
(a.) Rearrange the above income statement to the contribution margin format.
(b.) If sales increase by 10 percent, what will be the firm's operating income?
(c.) Calculate the amount of revenue required for Ackee's Food Center to break even. With a breakdown of how to do each.