Reference no: EM132037741
Question - Contribution Margin Ratio, Variable Cost Ratio, Break-Even Sales Revenue
The controller of Pelley Company prepared the following projected income statement:
Sales $95,000
Total variable cost 68,400
Contribution margin $26,600
Total fixed cost 14,000
Operating income $12,600
Unless otherwise instructed, round all total dollar figures (e.g., sales, total contribution margin) to the nearest dollar, breakeven or target units to the nearest unit, and unit costs and unit contribution margins to the nearest cent. Round ratios to four significant digits.
Required:
1. Calculate the contribution margin ratio.
2. Calculate the variable cost ratio.
3. Calculate the break-even sales revenue for Pelley.