The controller of Ashton Company prepared the following projected income statement: Sales.................................$88,000 Total variable cost...................23,760 Contribution margin

Question:

The controller of Ashton Company prepared the following projected income statement:

Sales.................................$88,000

Total variable cost...................23,760

Contribution margin...............$64,240

Total fixed cost.....................43,800

Operating income..................$20,440

Required:

1. Calculate the Contribution margin ratio.

2. Calculate the variable cost ratio.

3. Calculate the break-even sales revenue for Ashton.

4. How could Ashton increase projected operating income without increasing the total sales revenue?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...