E$6-24($Algo$)$ Computing Target Profit, Preparing Contribution Margin Income Statement, Computing Margin of Safety $[$LO $6-2,6-3]$

Erin Shelton, Incorporated, wants to earn a target profit of $$960,000$ this year. The company's fixed costs are expected to be $$1,320,000$ and its variable costs are expected to be $40$ percent of sales. Erin Shelton, Incorporated, earned $$860,000$ in profit last year.

Required:

Calculate break$-$even sales for Erin Shelton, Incorporated.

Prepare a contribution margin income statement on the basis of break$-$even sales,

Calculate the required sales to meet the target profit of $$960,000.$

Prepare a contribution margin income statement based on sales required to earn a target profit of $$960,000.$

When the company earns $$960,000$ of net income, what is its margin of safety and margin of safety as a percentage of sales?