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1. Assume the role of Cathy. Explain to Gary why his use of operating income per cushion was in error. 2. Using the following income statements, prepare a contribution margin income statement for October. September October Sales Cost of Goods Sold Gross Profit Rent Expense Wages Expenses Shipping expense Utilities expense Advertising expense Insurance expense Operating income $25,000 37.500 15,000 22,500 1,500 5,000 1,875 750 875 400 10,000 15,000 1,500 3,500 1,250 750 750 400 Wages and advertising are mixed costs. The fixed portion of each of those costs is $500. What is Gary's break-even sales in units and dollars? Gary plans to sell 500 seat cushions next month. How much operating income can Gary expect to carn next month if he actually realizes his target sales? 3. 4. 1. Assume the role of Cathy. Explain to Gary why his use of operating income per cushion was in error. 2. Using the following income statements, prepare a contribution margin income statement for October. September October Sales Cost of Goods Sold Gross Profit Rent Expense Wages Expenses Shipping expense Utilities expense Advertising expense Insurance expense Operating income $25,000 37.500 15,000 22,500 1,500 5,000 1,875 750 875 400 10,000 15,000 1,500 3,500 1,250 750 750 400 Wages and advertising are mixed costs. The fixed portion of each of those costs is $500. What is Gary's break-even sales in units and dollars? Gary plans to sell 500 seat cushions next month. How much operating income can Gary expect to carn next month if he actually realizes his target sales? 3. 4