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Western Travel uses the contribution margin income statement internally. Western's first-quarter results are as follows:

Western Travel

Contribution Margin Income Statement

Three Months Ended March 31
Sales Revenue--------------------------------------------------------------------------$500,000
Less: Variable expenses--------------------------------------------------------------100,000
Contribution margin-----------------------------------------------------------------$400,000
Less: Fixed expenses------------------------------------------------------------------174,000
Operating income-------------------------------------------------------------------- $226,000

Western's relevant range is sales of between $100,000 and $700,000.

problem 1) Prepare contribution margin income statements at sales levels of $255,000 and $363,000. (Hint use contribution margin ratio.)

problem 2) Compute breakeven sales in dollars.

Accounting Basics, Accounting

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  • Reference No.:- M945248

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