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Gordons Steel Parts produces parts for the automotive industry. The company has monthly fixed expenses...

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Accounting

Gordons Steel Parts produces parts for the automotive industry. The company has monthly fixed expenses of $640,000 and a contribution margin of 95% of revenues.

Requirements:

  1. Compute Gordons Steel Parts monthly breakeven sales in dollars.
  2. Use the contribution margin ratio to project operating income (or loss) if revenues are $530,000 and if they are $1,040,000.
  3. Do the results in Requirement 2 make sense given the breakeven sales you computed in Requirement 1? Explain.

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