Edwards Co. Contribution margin income statement breakeven

Prepare a contribution margin format income statement-calculate break-even point. Presented here is the income statement for Edwards Co. for February.
Sales \$80,000
Cost of Goods Sold \$48,000
Gross Profit \$32,000
Operating Expenses \$21,000
Operating Income \$10,800
Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 35%.
Required:
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a. Rearrange the preceding income statement to the contribution margin format.
b. Calculate operating income if sales volume increases by 20%.
c. Calculate the amount of revenue required for Edwards to break even.

Solution Summary

See excel attached.

Your tutorial creates a contribution margin income statement (click in cells to see computation in Excel). The revised profit is computed and then shown as a proof in financial statement format. Breakeven is computed for you showing you the formula and then the answer.

\$2.19
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• edwards co contribuiton miargin breakeven.xlsx

Carol Sargent, PhD

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Active since 2010

BSc, University of Virginia
MSc, University of Virginia
PhD, Georgia State University

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