Break-Even in Sales Revenue, Changes in Variables Carmichael Corporation is in the process of preparing next year's budget. The pro forma income statement for the current year is as follows: Sales $1,800,000 Cost of sales: Direct materials $250,000 Direct labor 180,000 Variable overhead 106,000 Fixed overhead 100,000 636,000 Gross profit $1,164,000 Selling and administrative expenses: Variable $400,000 Fixed 350,000 750,000 Operating income $414,000 Required: 1. What is the break-even sales revenue for Carmichael Corporation for the current year? In your calculations, carry the contribution margin ratio to two decimal places.$937500 2. For the coming year, the management of Carmichael Corporation anticipates an 8 percent increase in variable costs and a $60,000 increase in fixed expenses. What is the break-even point in dollars for next year? In your computation, round the contribution margin ratio to four decimal places. Round your final answer to the nearest dollar. (CMA adapted)
Break-Even in Sales Revenue, Changes in Variables Carmichael Corporation is in the process of preparing next year's budget. The pro forma income statement for the current year is as follows: Sales $1,800,000 Cost of sales: Direct materials $250,000 Direct labor 180,000 Variable overhead 106,000 Fixed overhead 100,000 636,000 Gross profit $1,164,000 Selling and administrative expenses: Variable $400,000 Fixed 350,000 750,000 Operating income $414,000 Required: 1. What is the break-even sales revenue for Carmichael Corporation for the current year? In your calculations, carry the contribution margin ratio to two decimal places.$937500 2. For the coming year, the management of Carmichael Corporation anticipates an 8 percent increase in variable costs and a $60,000 increase in fixed expenses. What is the break-even point in dollars for next year? In your computation, round the contribution margin ratio to four decimal places. Round your final answer to the nearest dollar. (CMA adapted)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 18E: Carmichael Corporation is in the process of preparing next years budget. The pro forma income...
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Question
Break-Even in Sales Revenue, Changes in Variables
Carmichael Corporation is in the process of preparing next year's budget. The pro forma income statement for the current year is as follows:
| Sales | $1,800,000 | |||
| Cost of sales: | ||||
| Direct materials | $250,000 | |||
| Direct labor | 180,000 | |||
| Variable overhead | 106,000 | |||
| Fixed overhead | 100,000 | 636,000 | ||
| Gross profit | $1,164,000 | |||
| Selling and administrative expenses: | ||||
| Variable | $400,000 | |||
| Fixed | 350,000 | 750,000 | ||
| Operating income | $414,000 |
Required:
1. What is the break-even sales revenue for Carmichael Corporation for the current year? In your calculations, carry the contribution margin ratio to two decimal places.$937500
2. For the coming year, the management of Carmichael Corporation anticipates an 8 percent increase in variable costs and a $60,000 increase in fixed expenses. What is the break-even point in dollars for next year? In your computation, round the contribution margin ratio to four decimal places. Round your final answer to the nearest dollar. (CMA adapted)
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