In the year 2017, Pyramid Consulting had the following contribution income statement:

Required

a. Determine the annual break-even point in sales revenue.

b. Determine the annual margin of safety in sales revenue.

c. What is the break-even point in sales revenue if management makes a decision that increases fixed costs by $57,000?

d. With the current cost structure, including fixed costs of \($285,000\), what dollar sales revenue is required to provide an after-tax net income of $200,000?

e. Prepare an abbreviated contribution income statement to verify that the solution to requirement (d)
will provide the desired after-tax income.

Transcribed Image Text:

PYRAMID CONSULTING Contribution Income Statement For the Year 2017 Sales revenue. Variable costs Cost of services Selling and administrative.. Contribution margin... Fixed costs-selling and administrative Before-tax profit... Income taxes (36%). After-tax profit $420,000 $1,300,000 200,000 (620,000) 680,000 (285,000) 395,000 (142,200) $ 252,800