Robert's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $$720,000$ and a contribution margin of $90\%$ of

revenues.

Read the requirements.

Requirement $1.$ Compute Robert's Steel Parts' monthly breakeven sales in dollars.

Begin by identifying the formula.

$($ Operating income

Compute Robert's Steel Parts' monthly breakeven sales in dollars. $($Round your answer up to the nearest whole number.$)$

The breakeven sales in dollars is

Requirement $2.$ Use the contribution margin ratio to project operating income $($or loss$)$ if revenues are $$540,000$ and if they are $$1,040,000.$

First, select the labels to calculate projected operating income. Then, calculate projected income $($or loss$)$ if revenues are $$540,000.$ Finally, calculate projected

income $($or loss$)$ if revenues are $$1,040,000.($Enter the contribution margin ratio as a whole percent. Enter losses with a minus sign or parentheses.$)$

Robert's Steel Parts

Operating Income Projection

at Different Sales Levels

If revenues

are $$540,000$

Sales revenue

Contribution margin ratio

Contribution margin

Fixed costs

Operating income $($loss$)$

Requirements

Compute Robert's Steel Parts' monthly breakeven sales in dollars.

Use the contribution margin ratio to project operating income $($or loss$)$ if

revenues are $$540,000$ and if they are $$1,040,000.$

Do the results in Requirement $2$ make sense given the breakeven sales you

computed in Requirement $1?$ Explain.