Question

Contribution margin, gross margin, and margin of safety. Mirabel Cosmetics manufactures and
sell s a face cream to small family-run stores in the greater Montreal area. It presents the monthly operating
statement of comprehensive income shown here to Fran~ois Laval, a potential investor in the business. Help
Laval understand Mirabel's cost structure.
Mirabel Cosmetics Statement of Operating Income for the Month of June
Units sold 10,000
Revenue $100,000
Cost of goods sold
Variable manufacturing costs
Fixed manufacturing costs
Total
Gross margin
Operating costs
Variable marketing costs
Fixed marketing and administration costs
Total operating costs
Operating income
$55,000
20,000
75,000
25,000
5,000
10,000
15,000
$ 10,000
.... L03
Net Fixed Costs = $51,000
.... L03
1. a. 489 tickets
.... L02
2. CM%, 40%
84 e CHAPTER 3 COST-VOLUME-PROFIT ANALYSIS
L02 ...
1. a. Operating income,
$120,000
L04 ...
1. llfeakeven = 12 children
L04 ...
1. Breakeveo = 39 carpels
Required
1. Recast the statement of operating income in a contribution format.
2. Calculate the contribution margin percentage and breakeven point in units and revenues for June.
3. What is the margin of safety (in units} for June?
4. If sales in June were only 8,000 units and Mirabel's tax rate is 30%, calculate its net income.

Answer 1