Presented below is the income statement for Kettridge's Farm for the month of April: $$\begin{array} { l l }
\text { Sales } & \$ 110,000 \
\text { Cost of goods sold } &\underline{ ( 57,000 ) }\
\text { Gross profit } & \$ 53,000 \
\text { Operating expenses } &\underline{ ( 38,000 )} \
\text { Operating income } & \underline{\underline{\$ 15,000}}
\end{array}$$ Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 40%.
(a.) Rearrange the income statement to the contribution margin format.
(b.) If sales increase by 10 percent, what will be the firm's operating income?
(c.) Calculate the amount of revenue required for Kettridge's Farm to break even.

Question

Presented below is the income statement for Kettridge's Farm for the month of April: $$\begin{array} { l l } 
\text { Sales } & \$ 110,000 \
\text { Cost of goods sold } &\underline{ ( 57,000 ) }\
\text { Gross profit } & \$ 53,000 \
\text { Operating expenses } &\underline{ ( 38,000 )} \
\text { Operating income } & \underline{\underline{\$ 15,000}}
\end{array}$$ Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 40%.
(a.) Rearrange the income statement to the contribution margin format.
(b.) If sales increase by 10 percent, what will be the firm's operating income?
(c.) Calculate the amount of revenue required for Kettridge's Farm to break even.

Quizplus · Accepted Answer

The Answer of Presented below is the income statement for Kettridge's Farm for the month of April: $$\begin{array} { l l } 
\text { Sales } & \$ 110,000 \
\text { Cost of goods sold } &\underline{ ( 57,000 ) }\
\text { Gross profit } & \$ 53,000 \
\text { Operating expenses } &\underline{ ( 38,000 )} \
\text { Operating income } & \underline{\underline{\$ 15,000}}
\end{array}$$ Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 40%.
(a.) Rearrange the income statement to the contribution margin format.
(b.) If sales increase by 10 percent, what will be the firm's operating income?
(c.) Calculate the amount of revenue required for Kettridge's Farm to break even.

Presented Below Is the Income Statement for Kettridge's Farm for the Month