Griffin's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of

$630,000 and a contribution margin of 85% 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 55%

of revenues. The company's monthly operating income, prior to these pressures, was

$271,000.

Read the

requirements ...in comments below:)

.

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.

(Fixed expenses+Operating income) /Contribution margin ratio=Target sales in dollars

(Round your answer up to the nearest whole dollar.)

Griffin must now achieve sales of $_____?to maintain the same level of profit.

Requirement 2. If monthly sales are $1,060,000, by how much will he need to cut fixed costs to maintain his prior profit level of

$271,000 per month?

Fixed expenses can only be $______?in order to maintain the prior profit level of $271,000 per month. Therefore, Griffin

will have to save at least $_______?per month in fixed costs by moving operations overseas if he plans to maintain his

prior profit level.