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2. Gordon's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $660,000 and a contribution margin of 80% of
2. Gordon's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $660,000 and a contribution margin of 80% of revenues. Read the requirements? Requirement 1. Compute Gordon's Steel Parts' monthly breakeven sales in dollars. Begin by identifying the formula. (1) (2) ) = (3) = Breakeven sales in dollars Compute Gordon's Steel Parts' monthly breakeven sales in dollars. (Round your answer up to the nearest whole number.) The breakeven sales in dollars is Requirement 2. Use the contribution margin ratio to project operating income (or loss) if revenues are $560,000 and if they are $1,040,000. First, select the labels to calculate projected operating income. Then, calculate projected income (or loss) if revenues are $560,000. Finally, calculate projected income (or loss) if revenues are $1,040,000. (Enter the contribution margin ratio as a whole percent. Enter losses with a minus sign or parentheses.) Gordon's Steel Parts Operating Income Projection at Different Sales Levels If revenues If revenues are $560,000 are $1,040,000 (4) (5) % % (6) (7) Operating income (loss) Requirement 3. Do the results in Requirement 2 make sense given the breakeven sales you computed in Requirement 1? Explain. Since $560,000 is (8) the breakeven point, it (9) Since $1,040,000 is (10) the breakeven point, it (11) 1: Requirements 1. Compute Gordon's Steel Parts' monthly breakeven sales in dollars. 2. Use the contribution margin ratio to project operating income (or loss) if revenues are $560,000 and if they are $1,040,000. 3. Do the results in Requirement 2 make sense given the breakeven sales you computed in Requirement 1? Explain. (3) (1) O O Contribution margin per unit O Contribution margin ratio O Fixed expenses O Operating income O Units sold O Variable expenses (2) O O Contribution margin per unit O Contribution margin ratio O Fixed expenses 0 Operating income O Units sold O Variable expenses O Contribution margin per unit Contribution margin ratio Fixed expenses Operating income O Units sold O Variable expenses (5) o (4) O O Fixed costs O Breakeven sales units O Sales revenue O Contribution margin per unit Variable costs O Contribution margin Breakeven sales units O Contribution margin per unit Contribution margin O Contribution margin ratio O Fixed costs O Variable costs (6) O Breakeven sales units O Contribution margin per unit Contribution margin O Fixed costs O Sales revenue Variable costs (8) O Fixed costs O Sales revenue Variable costs above O below (9) a does not make sense that there is an operating loss O makes sense that there is an operating loss (7) O O Breakeven sales units Contribution margin per unit O Contribution margin (10) O above O below (11) O does not make sense that there is a positive operating income O makes sense that there is a positive operating income
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