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Arberg Companys controller prepared the following budgeted income statement for the coming year: Sales $418,000 Variable cost 284,240 Contribution margin $133,760 Fixed cost 79,360 Operating

Arberg Companys controller prepared the following budgeted income statement for the coming year:

Sales $418,000
Variable cost 284,240
Contribution margin $133,760
Fixed cost 79,360
Operating income $54,400
Required:
1. What is Arbergs variable cost ratio? What is its contribution margin ratio?
2. Suppose Arbergs actual revenues are $30,000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement.
3. How much sales revenue must Arberg earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer.
4. What is Arbergs expected margin of safety?
5. What is Arbergs margin of safety if sales revenue is $377,000?

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