Question

For its top​ managers, Airborn Travel formats its income statement as​ follows:

Airborn Travel
Contribution Margin Income Statement
Three Months Ended March 31, 2016
	Net Sales Revenue	$313,500
	Variable Costs	125,400
	Contribution Margin	188,100
	Fixed Costs	171,000
	Operating Income	$17,100

Airborn's relevant range is between sales of $256,000 and $362,000.

Requirement 1. Calculate the contribution margin ratio. Select the labels and enter the amounts to calculate the contribution margin ratio. ​(Enter the contribution margin ratio as a whole​ percentage, X%.)

	/		=	Contribution margin ratio
	/		=		%

Requirement 2. Prepare two contribution margin income​ statements: one at the $256,000 sales level and one at the $362,000 sales level. ​(Hint​: The proportion of each sales dollar that goes toward variable costs is constant within the relevant​ range.)First prepare the contribution margin income statement at the $256,000 sales level. ​(Use a minus sign or parentheses for a​ loss.)

Airborn Travel
Contribution Margin Income Statement
Three Months Ended March 31, 2016
Net Sales Revenue
Variable Costs
Contribution Margin
Fixed Costs
Operating Income (Loss)

Now prepare the contribution margin income statement at the $362,000 sales level. ​(Use a minus sign or parentheses for a​ loss.)

Airborn Travel
Contribution Margin Income Statement
Three Months Ended March 31, 2016
Net Sales Revenue
Variable Costs
Contribution Margin
Fixed Costs
Operating Income (Loss)

Answer 1

Requirement 1. Calculate the contribution margin ratio. Select the labels and enter the amounts to calculate the contribution margin ratio. ​(Enter the contribution margin ratio as a whole​percentage, X%.)

Contribution margin	/	Sales revenue	=	Contribution margin ratio
188100	/	313500	=	60	%

Requirement 2. Prepare two contribution margin income​statements: one at the $256,000 sales level and one at the $362,000 sales level. ​(Hint​: The proportion of each sales dollar that goes toward variable costs is constant within the relevant​ range.)First prepare the contribution margin income statement at the $256,000 sales level. ​(Use a minus sign or parentheses for a​ loss.)

Airborn Travel
Contribution Margin Income Statement
Three Months Ended March 31, 2016
Net Sales Revenue	256000
Variable Costs	102400
Contribution Margin	153600
Fixed Costs	171000
Operating Income (Loss)	-17400

Now prepare the contribution margin income statement at the $362,000 sales level. ​(Use a minus sign or parentheses for a​loss.)

Airborn Travel
Contribution Margin Income Statement
Three Months Ended March 31, 2016
Net Sales Revenue	362000
Variable Costs	144800
Contribution Margin	217200
Fixed Costs	171000
Operating income	46200