Question
Presented here is the income statement for Big Sky Incorporated for the month of February: Sales $ 60,500 Cost of goods sold 54,500 Gross profit
Presented here is the income statement for Big Sky Incorporated for the month of February: Sales $ 60,500 Cost of goods sold 54,500 Gross profit $ 6,000 Operating expenses 14,400 Operating loss $ (8,400) Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 20%. Required: Rearrange the preceding income statement to the contribution margin format. If sales increase by 10%, what will be the firm's operating income (or loss)? Calculate the amount of revenue required for Big Sky to break even.
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