Question

Travel uses the contribution margin income statement internally. First Nation's ​first-quarter results follow. LOADING... ​(Click the icon to view the income​ statement.) First Nation's relevant range is between sales of $ 135 comma 000 and $ 780 comma 000 .

First Nation Travel
Contribution Margin Income Statement
Three Months Ended March 31
	Sales revenue	$317,500
	Less: Variable expenses	(128,000)
	Contribution margin	189,500
	Less: Fixed expenses	(180,000)
	Operating income	$9,500

Requirements 1. Prepare contribution margin income statements at sales levels of $ 185 comma 000 and $ 680 comma 000 . ​(​Hint: Use the contribution margin​ ratio.) 2. Compute​ break-even sales in dollars. Requirement 1. Prepare the contribution margin income statement at the $ 185 000 level. ​(Round interim percentages to the nearest whole percent. Enter losses with a minus sign or​ parentheses.) First Nation Travel

Answer 1

Part. 1
		First Nation Travel			First Nation Travel
		Income Statement			Income Statement
		For the year ended March 31			For the year ended March 31
		Particulars	Amount $		Particulars	Amount $
		Sales	185,000		Sales	680,000
		Less : Variable Expenses	74,000		Less : Variable Expenses	272,000
		Contribution margin ( 60% of Sales )	111,000		Contribution margin ( 60% of Sales )	408,000
		Less : Fixed Expenses	(180,000)		Less : Fixed Expenses	(180,000)
		Operating Income	(69,000)		Operating Income	228,000
		Note :
		CM Ratio (at sales level 317,500) :	59.69%
			round off to 60%
		Contribution
		Sales
Part. 2
		Particulars	Amount $		Break Even Sales :-	Fixed Cost	:	180,000/60%
						CM Ratio
		Sales	300,000
		Less : Variable Expenses	120,000			$        300,000
		Contribution margin ( 60% of Sales )	180,000
		Less : Fixed Expenses	(180,000)
		Operating Income	Nil
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