E7-26A (similar to) Question Help Gordon's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $640,000 and a contribution margin of 90% of revenues. Gordon feels like he's in a giant squeeze play: The automotive manufacturers are demanding lower prices, and the steel producers have increased raw material costs. Gordon's contribution margin has shrunk to 70% of revenues. The company's monthly operating income, prior to these pressures, was $305,000 Read the requirements. Requirement 1. To maintain this same level of profit, what sales volume (in sales revenue) must Gordon now achieve? Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. = Target sales in dollars Requirements X 1. To maintain this same level of profit, what sales volume (in sales revenue) must Gordon now achieve? 2. Gordon believes that his monthly sales revenue will only go as high as $1,050,000. He is thinking about moving operations overseas to cut fixed costs If monthly sales are $1,050,000, by how much will he need to cut fixed costs to maintain his prior profit level of $305,000 per month? Print Done Done