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Income Statement Projected Income Statement Sales Revenue $2,500,000 Variable Costs Purchases $750,000 0.3 Direct labor $600,000...

Income Statement Projected Income Statement Sales Revenue $2,500,000 Variable Costs Purchases $750,000 0.3 Direct labor $600,000 0.24 $1,350,000 $1,150,000 Fixed Costs Selling $500,000 Administrative $485,000 Manufacturing Overhead $150,000 $1,135,000 Profit Dollars Percentage Calculate the Contribution Margin Calculate the Gross Margin Ratio Calculate Breakeven Sales Calculate Margin of Safety based on the 5% expected sales increase.

Income Statement Projected Income Statement
Sales Revenue $2,500,000
Variable Costs
Purchases $750,000 0.3
Direct labor $600,000 0.24 $1,350,000
$1,150,000
Fixed Costs
Selling $500,000
Administrative $485,000
Manufacturing Overhead $150,000 $1,135,000
Profit
Dollars Percentage
Calculate the Contribution Margin
Calculate the Gross Margin Ratio
Calculate Breakeven Sales
Calculate Margin of Safety based on the 5% expected sales increase.

Solutions

Expert Solution

Income Statement Projected Income Statement
Sales Revenu (a) $2,500,000 $2,625,000
(2500000*1.05)
Les: Variable cost
Purchase (30% X a) $750,000 $787,500
Direct Material (24%*a) $600,000 $630,000
Total Variable cost (b) $1,350,000 $1,417,500
Contribution Margin (c= a-b) $1,150,000 $1,207,500
Less: Fixed Cost (d)
Selling $500,000 $500,000
Administrative $485,000 $485,000
Manufacturing OH $150,000 $150,000
Total Fixed Oh $1,135,000 $1,135,000
Profit (e=c-d) $15,000 $72,500
Contribution Margin Ratio= Contribution / Sales
Projected
= 1207500/2625000= 46%
Contribution Margin Dollar:= $1207500
Original
=1150000/2500000= 46%
Contribution Margin Dollar:= $1150000
Gross Margin Ratio= Gross Profir / Sales
Projected
1057500/2625000= 40.29%
Gross Profit= Sales- Variable Cost- Manufacturing Overhead
=2625000-1417500-150000= 1057500
Original
1000000/2500000= 40%
Gross Profit= Sales- Variable Cost- Manufacturing Overhead
=2500000-1350000-150000= $1000000
Projected
BreakEven Sales (in $)= Fixed Cost/ CM Ratio
=1135000/ 46%= 2467391
Break Even Sales %= Breakeven Sales/ Total Sales
=2467391.304/2625000= 94%
Original
BreakEven Sales (in $)= Fixed Cost/ CM Ratio
=1135000/ 46%= 2467391
Break Even Sales %= Breakeven Sales/ Total Sales
=2467391.304/250000= 98.70%
Margin of Safety
Total Sales- BEP Sales
=2625000-2467391.304= $157608.69

ekkarill92 answered 1 month ago
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