Prepare a contribution margin format income statement; calculate breakeven point Presented here is the income statement for Big Surf, Inc., for the month of May:
|
Sales |
$ 65,000 |
|
Cost of goods sold |
53,500 |
|
Gross profit. |
$ 11,500 |
|
Operating expenses |
14,000 |
|
Operating loss |
$ (2,500) |
Based on an analysis of cost behavior patterns, it has been determined that the company’s contribution margin ratio is 30%.
Required:
a. Rearrange the preceding income statement to the contribution margin format.
b. If sales increase by 10%, what will be the firm’s operating income?
c. Calculate the amount of revenue required for Big Surf, Inc., to break even.