The Skateboard Zone, Inc. Income Statement For the period ended December 31, 2020 ...
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Accounting
The Skateboard Zone, Inc.
Income Statement
For the period ended December 31, 2020
Sales
$800,000
Cost of goods sold
300,000
Gross Margin
500,000
Selling and administrative expenses:
Selling expenses
$250,000
Administrative expenses
160,000
410,000
Net operating income
$90,000
Skateboards sell, on the average, for $400 each. The company does not make the skateboards: it purchases them from a supplier for $150 per skateboard. Variable selling expenses are $50 per skateboard sold. The remaining selling expenses are fixed. The administrative expenses are 25% variable and 75% fixed.
Required:
Redo the income statement in the contribution margin format.
Calculate the contribution margin per unit and contribution margin ratio.
Calculate the breakeven point in units and in dollars of sales.
Calculate the margin of safety and margin of safety percentage.
Calculate the degree of operating leverage.
The company would like to earn $180,000 of net operating income. What will be the required sales in units and in dollars?
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