Question

Presented here is the income statement for Fairchild Co. for March:

Sales	$	78,500
Cost of goods sold		42,500
Gross profit	$	36,000
Operating expenses		31,500
Operating income	$	4,500

Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 25%.

Required:

a. Rearrange the preceding income statement to the contribution margin format.

b. Calculate operating income if sales volume increases by 9%. (Do not round intermediate calculations.)

c. Calculate the amount of revenue required for Fairchild to break-even.

Answer 1