Spirit Rock Calendars imprints calendars with college names. The company has fixed expenses of $1,065,000 each month plus variable expenses of $3.50 per carton of calendars. Of the variable expense, 74% is cost of goods sold, while the remaining 26% relates to variable operating expenses. The company sells each carton of calendars for $13.50. Read the requirements. Requirement 1. Compute the number of cartons of calendars that Spirit Rock Calendars must sell each month to breakeven. Begin by determining the basic income statement equation. Sales revenue Fixed expenses Variable expenses = Operating income Using the basic income statement equation you determined above solve for the number of cartons to break even. The breakeven sales is 106,500 cartons. Requirements - X in order to earn $304,000 in operating income. 1. Compute the number of cartons of calendars that Spirit Rock Calendars must sell each month to break even. 2. Compute the dollar amount of monthly sales that the company needs in order to earn $304,000 in operating income (round the contribution margin ratio to two decimal places). 3. Prepare the company's contribution margin income statement for June for sales of 460,000 cartons of calendars. 4. What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales? 5. By what percentage will operating income change if July's sales volume is 16% higher? Prove your answer. ratio = Target sales in dollars Check Answer