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Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming...

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Question

Accounting

Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense).

Required:

1. Calculate the sales revenue that Chillmax must make to earn operating income of $81,900 by using the point in sales equation. $fill in the blank 666aa801f077029_1

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Sales for Target Income = Total Fixed Cost + Target Income
Contribution Margin Ratio

Review the "How to Calculate Sales Needed to Earn a Target Operating Income" example in your text.

2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1. Enter amounts as positive numbers.

Chillmax Company Contribution Margin Income Statement At Point in Sales for Target Income
Total
Sales
Total variable cost
Total contribution margin
Total fixed cost
Operating income

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