Computing Break$-$Even and Margin of Safety

Assume that last year, Cliff Consulting, a firm in Berkeley, CA$,$ had the following contribution income statement.

CLIFF CONSULTING

Contribution Income Statement

For the Year Ended September $30$

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 $$80,000?$

Note: Round up to the nearest dollar, enter $$80$ for $$79\mathrm{.}2$

$4$

d$.$ With the current cost structure, including fixed costs of $$660,000,$ what dollar sales revenue is required to provide a before$-$tax profit of $$350,000?$

Note: Round up to the nearest dollar, enter $$80$ for $$79\mathrm{.}2$

$

e$.$ Prepare an abbreviated contribution income statement to verify that the solution to requirement $d$ will provide the desired before$-$tax profit.

Note: Round all answers to the nearest dollar, enter $$49$ for $$49\mathrm{.}3,$ or $$50$ for $$49\mathrm{.}7$

Contribution margin

Fixed costs

Net income before taxes

Sales revenue

Variable costs