Presented are the 2017 and 2018 functional income statements of Regional Distribution Inc.:

Required

a. Determine Regional Distribution’s break-even point in sales dollars.

b. What dollar sales volume is required to earn an after-tax profit of $480,000?

c. Assuming budgeted 2017 sales of $6,000,000, prepare a 2017 contribution income statement.

d. Discuss the reliability of the calculations in requirements a-c, including the limitations of the CVP model and how they affect the reliability of the model.

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REGIONAL DISTRIBUTION INC. Functional Income Statements For Years Ending December 31, 2017 and 2018 2017 Sales.... $2,760,000 2018 $2,500,000 Expenses Cost of goods sold. $2,070,000 $1,875,000 Shipping. 107,700 100,000 Sales order processing. 26,250 25,000 Customer relations 60,000 50,000 Depreciation 40,000 40,000 125,000 (2,428,950) 125,000 (2,215,000) Administrative. Before-tax profit. Income taxes (40%). After-tax profit. 331,050 (132,420) $ 198,630 285,000 (114,000) $ 171,000