=+4-33 KK Contribution margin, gross margin and margin of safety OBJECTIVES 1, 2, 5 Mirabella Cosmetics manufactures and sells a face cream to health and beauty stores in the greater Sydney area. It presents the monthly profit statement shown here to George Chang, a potential investor in the business. Help Mr Chang understand Mirabella’s cost structure.

Chapter 4: Cost–volume–profit analysis 157 M04_HORN3377_02_LT_C04.indd 157 2/09/13 3:22 PM 1

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10 11 12 13 14 A B C D Units sold 10 000 seuneveR 000001$

Cost of goods sold Variable manufacturing costs $55 000 Fixed manufacturing costs 20 000 Total 75 000 nigram ssorG 00052 Operating costs costs gnitekram elbairaV 0005$

Fixed marketing & administration costs 10 000 latoT operating costs 00051 Operating profit $ 10 000 Mirabella Cosmetics Operating profit statement, June 2015 Required 1 Recast the income statement to emphasise contribution margin.