Break-Even in Sales Revenue, Changes in Variables Carmichael Corporation is in the process of preparing...
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Accounting
Break-Even in Sales Revenue, Changes in Variables
Carmichael Corporation is in the process of preparing next year's budget. The pro forma income statement for the current year is as follows:
Sales
$1,800,000
Cost of sales:
Direct materials
$250,000
Direct labor
180,000
Variable overhead
106,000
Fixed overhead
100,000
636,000
Gross profit
$1,164,000
Selling and administrative expenses:
Variable
$400,000
Fixed
350,000
750,000
Operating income
$414,000
Required:
1. What is the break-even sales revenue for Carmichael Corporation for the current year? In your calculations, carry the contribution margin ratio to two decimal places. $________________
2. For the coming year, the management of Carmichael Corporation anticipates an 8 percent increase in variable costs and a $60,000 increase in fixed expenses. What is the break-even point in dollars for next year? In your computation, round the contribution margin ratio to four decimal places. Round your final answer to the nearest dollar.(CMA adapted) $________________
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