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Erin Shelton, Inc., wants to earn a target profit of $900,000 this year. The companys fixed costs are expected to be $1,200,000 and its variable
Erin Shelton, Inc., wants to earn a target profit of $900,000 this year. The companys fixed costs are expected to be $1,200,000 and its variable costs are expected to be 60 percent of sales. Erin Shelton, Inc., earned $800,000 in profit last year.
Required: 1. Calculate break-even sales for Erin Shelton, Inc. Break-Even Sales 2. Prepare a contribution margin income statement on the basis break-even sales. (Do not leave a Contribution Margin Income Statement Contribution Margin Profit 3. Calculate the required sales to meet the target profit of $900,000. Target Sales 4. Prepare a contribution margin income statement based on sales required to earn a target profit of $900,000. Contribution Margin Income Statement Contribution Margin I Profit 5. When the company earns $900,000 of net income, what is its margin of safety and margin of safety as a percentage of sales? (F Margin of Safety Margin of Safety as a Percentage of Sales
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