Prepare a contribution margin format income statement-calculate break-even point. Presented here is the income statement for Edwards Co. for February.
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%.
Show all calculations
a. Rearrange the preceding income statement to the contribution margin format.
b. Calculate operating income if sales volume increases by 20%.
(Note: Do not construct an income statement to get your answer.)
c. Calculate the amount of revenue required for Edwards to break even.
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.