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Stardust Beauty manufactures and sells a face cream to small specialty stores in the greater Los Angeles area. It presents the monthly operating income statement
Stardust 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 Nunez, a potential investor in the business. Help Mr. Nunez understand Stardust Beauty's cost structure. Stardust Beauty Operating Income Statement, June 2020 Units sold Revenues 10,000 $ 200,000 Cost of goods sold Variable manufacturing costs $ 75,000 32,900 Fixed manufacturing costs 107,900 Total Gross margin 92,100 Operating costs Variable marketing costs $ 53,000 Fixed marketing and administrative costs 17,500 Total operating costs Operating income 70,500 $ 21,600 1. Recast the income statement to emphasize contribution margin. 2. Calculate the contribution margin percentage and breakeven point in units and revenues for June 2020. 3. What is the margin of safety (in units) for June 2020? 4. If sales in June were only 7,500 units and Stardust's tax rate is 30%, calculate its net income
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