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William's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $620,000 and a contribution margin of 80% of revenues
William's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $620,000 and a contribution margin of 80% of revenues Read the requirements Requirement 1. Compute William's Steel Parts' monthly breakeven sales in dollars Begin by identifying the formula Operating income Fixed expenses Breakeven sales in )+ Contribution margin ratio dollars Compute William's Steel Parts' monthly breakeven sales in dollars. (Round your answer up to the nearest whole number.) The breakeven sales in dollars is $775,000 Requirement 2. Use the contribution margin ratio to project operating income (or loss) if revenues are $510,000 and if they are $1,030,000. First, select the labels to calculate projected operating income. Then, calculate projected income (or loss) if revenues are $510,000. Finally, calculate projected income (or loss) if revenues are $1,030,000 (Enter the contribution margin ratio as a whole percent. Enter losses with a minus sign or parentheses) Now prepare an operating income projection at the $1,060,000 revenue level. (Enter the contribution margin ratio as a whole percent Enter losses with a minus sign or parentheses.) Grover's Steel Parts Operating Income Projection At Different Sales Levels Sales revenue Contribution margin ratio Contribution margin Fixed costs Operating income (loss) If revenues If revenues are $510,000 are $1,030,000 Requirement 3. Do the results in Requirement 2 make sense given the breakeven sales you computed in Requirement 1? Explain. Recall that the breakeven sales levels is the volume of sales at which the company will realize $0 of operating income. Any sales volume above the breakeven point will result in a positive operating income and any sales level below the breakeven point will result in an operating loss for the company. Do the results in Requirement 2 make sense given the breakeven sales you computed in Requirement 1
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