Reference no: EM131875953

Question - Cost - Volume - Profit Analysis

Prepare Contribution margin income statements.

Western Travel uses the contribution margin income statement internally. Western's first-quarter results are as follows:

Western Travel Contribution Margin Income Statement Three months Ended March 31

Sales Revenue.................................................. $500,000

Less Variable expenses................................... $100,000

Contribution margin....................................... $400,000

Less: Fixed expenses...................................... $174,000

Operating income........................................... $226,000

Western's relevant range is sales of between $100,000 and $700,000.

Requirements:

1. Prepare contribution margin income statements at sales level of $255,000 and $363,000. (Hint: Use the contribution margin Ratio.)

2. Compute breakeven sales in dollars.