Vairs Steel Parts produces parts for the automobile industry The company has monthly fixed expenses of $600,000 and a contribution margin of 80 of revenues Requirements 1 Compute Vairs Steel Parts monthly break even sales in dollars Use the contribution margin ratio shortcut approach 2 Use the cont...

Req 1 Breakeven sales in dollars Fixed expenses Operating income Contribut ...

Vairs Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $600,000

Question:

Vair’s Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $600,000 and a of 80% of revenues.
Requirements
1. Compute Vair’s Steel Parts’ monthly break-even sales in dollars. Use the ratio shortcut approach.
2. Use the ratio to project operating income (or loss) if revenues are $700,000 and if they are $1,000,000.
3. Do the results in Requirement 2 make sense given the break-even sales you computed in Requirement 1? Explain.
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...