Computing breakeven sales and operating income or loss under different conditions Gilbert’s Steel Parts produces parts for the automobile industry. The company has monthly fixed costs of $640,220 and a contribution margin of 85% of revenues. Requirements Compute Gilbert’s monthly breakeven sales in dollars. Use the contribution margin ratio approach. Use contribution margin income statements to compute Gilbert’s monthly operating income or operating loss if revenues are $500,000 and if they are $1,050,000. Do the results in Requirement 2 make sense given the breakeven sales you computed in Requirement 1? Explain.
Computing breakeven sales and operating income or loss under different conditions Gilbert’s Steel Parts produces parts for the automobile industry. The company has monthly fixed costs of $640,220 and a contribution margin of 85% of revenues. Requirements Compute Gilbert’s monthly breakeven sales in dollars. Use the contribution margin ratio approach. Use contribution margin income statements to compute Gilbert’s monthly operating income or operating loss if revenues are $500,000 and if they are $1,050,000. Do the results in Requirement 2 make sense given the breakeven sales you computed in Requirement 1? Explain.
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 4PA: Markham Farms reports the following contribution margin income statement for the month of August....
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Computing breakeven sales and operating income or loss under different conditions
Gilbert’s Steel Parts produces parts for the automobile industry. The company has monthly fixed costs of $640,220 and a contribution margin of 85% of revenues.
Requirements
- Compute Gilbert’s monthly breakeven sales in dollars. Use the contribution margin ratio approach.
- Use contribution margin income statements to compute Gilbert’s monthly operating income or operating loss if revenues are $500,000 and if they are $1,050,000.
- Do the results in Requirement 2 make sense given the breakeven sales you computed in Requirement 1? Explain.
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