RoyaltyRoyalty

Beauty manufactures and sells a face cream to small specialty stores in the greater Los Angeles area. It presents the monthly operating income statement shown here to George

GomezGomez, a potential investor in the business. Help Mr. GomezGomez understand RoyaltyRoyalty Beauty's cost structure.

Royalty Beauty

Operating Income Statement, June 2017

Units sold

10,000

Revenues

$120,000

Cost of goods sold

Variable manufacturing costs

$65,000

Fixed manufacturing costs

28,240

Total

93,240

Gross margin

26,760

Operating costs

Variable marketing costs

$2,200

Fixed marketing and administrative costs

14,000

Total operating costs

16,200

Operating income

$10,560

.	Recast the income statement to emphasize contribution margin.
2.	Calculate the contribution margin percentage and breakeven point in units and revenues for June 20172017.
3.	What is the margin of safety (in units) for June 20172017?
4.	If sales in June were only 9 comma 5009,500 units and RoyaltyRoyalty's tax rate is 3030%, calculate its net income.