Mirabella Cosmetics manufactures and sells a face cream to small ethnic stores in the greater New York area. It presents the monthly operating income statement shown here to George Lopez, a potential investor in the business. Help Mr. Lopez understand Mirabellas cost structure.

1. Recast the income statement to emphasize contribution margin.

2. Calculate the contribution margin percentage and breakeven point in units and revenues for June 2011.

3. What is the margin of safety? (in units) for June? 2011?

4. If sales in June were only 8 comma 0008,000 units and Mirabella?'s tax rate is 30?%, calculate its net income.

Mirabella Cosmetics Operating Income Statement, June 2011 Units sold Revenues Cost of goods sold 55,000 Variable Manufacturing Costs Fixed Manufacturing costs 15,000 Total Gross Margin Operating Costs Variable Marketing Costs 27,500 10,000 Fixed Marketing and Administrative Costs Total Operating Costs Operating Income 10,000 150.000 70,000 80,000 37.500 42.500