1. Break-Even in Sales Revenue, Variable-Costing Ratio, Contribution Margin Ratio, Margin of Safety

   Hammond Company runs a driving range and golf shop. The budgeted income statement for the coming year is as follows.

   Sales	$1,240,000
   Less: Variable expenses	706,800
   Contribution margin	$533,200
   Less: Fixed expenses	425,000
   Income before taxes	$108,200
   Less: Income taxes	43,280
   Net income	$64,920

   Required:

   1. What is Hammonds variable cost ratio? Enter your answer as a decimal value rounded to two decimal places. fill in the blank e54d1dfc305305f_1

   What is the contribution margin ratio? Enter your answer as a decimal value rounded to two decimal places. (Express as a decimal-based amount rather than a whole percent.) fill in the blank e54d1dfc305305f_2

   2. Suppose Hammonds actual revenues are $200,000 greater than budgeted. By how much will before-tax profits increase? Calculate the answer without preparing a new income statement. $fill in the blank e54d1dfc305305f_3

   3. How much sales revenue must Hammond earn in order to break even? Round your answer to the nearest dollar. $fill in the blank e54d1dfc305305f_4

   What is the expected margin of safety? Round your answer to the nearest dollar. $fill in the blank e54d1dfc305305f_5

   4. How much sales revenue must Hammond generate to earn a before-tax profit of $130,000? Round your answer to the nearest dollar. $fill in the blank e54d1dfc305305f_6

   How much sales revenue must Hammond generate to earn an after-tax profit of $90,000? Round your answer to the nearest dollar. $fill in the blank e54d1dfc305305f_7

   Prepare a contribution margin income statement to verify the accuracy of your last answer. Round your answers to the nearest dollar.

   Hammond Company Contribution Margin Income Statement

   Contribution marginLess: Fixed expensesLess: Variable expensesProfit before taxesSalesTaxes	$- Select -
   Contribution marginLess: Fixed expensesLess: Variable expensesProfit before taxesSalesTaxes	- Select -
   Contribution marginLess: Fixed expensesLess: Variable expensesProfit before taxesSalesTaxes	$- Select -
   Contribution marginLess: Fixed expensesLess: Variable expensesProfit before taxesSalesTaxes	- Select -
   Contribution marginLess: Fixed expensesLess: Variable expensesProfit before taxesSalesTaxes	$- Select -
   Contribution marginLess: Fixed expensesLess: Variable expensesProfit before taxesSalesTaxes	- Select -
   Net incomeNet loss	$- Select -

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