Griffin's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $600,000 and a contribution margin of 95% of revenues. Griffin 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. Griffin's contribution margin has shrunk to 75% of revenues. The company's monthly operating income, prior to these pressures, was $388,000. Read the requirements. Requirement 1. To maintain this same level of profit, what sales volume (in sales revenue) must Griffin 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 1. Compute Graham's Steel Parts' monthly breakeven sales in dollars. 2. Use the contribution margin ratio to project operating income (or loss) if revenues are $510,000 and if they are $1,030,000. 3. Do the results in Requirement 2 make sense given the breakeven sales you computed in Requirement 1? Explain. -