Calculate operating income if sales volume increases by 20%.
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
21,200
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:
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.
