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E6-24(Algo) Computing Target Profit, Preparing Contribution Margin Income Statement, Computing Margin of Safety...

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Accounting

E6-24(Algo) Computing Target Profit, Preparing Contribution Margin Income Statement, Computing Margin of Safety [LO 6-2,63]
Erin Shelton, Incorporated, wants to earn a target profit of $960,000 this year. The company's fixed costs are expected to be $1,320,000 and its variable costs are expected to be 40 percent of sales. Erin Shelton, Incorporated, earned $860,000 in profit last year.
Required:
Calculate break-even sales for Erin Shelton, Incorporated.
Prepare a contribution margin income statement on the basis of break-even sales.
Calculate the required sales to meet the target profit of $960,000.
Prepare a contribution margin income statement based on sales required to earn a target profit of $960,000.
When the company earns $960,000 of net income, what is its margin of safety and margin of safety as a percentage of sales?
Complete this question by entering your answers in the tabs below.
Prepare a contribution margin income statement on the basis of break-even sales.
Note: Do not leave any cells blank. Enter a '0' wherever necessary.
\table[[Contribution Margin Income Statement],[Sales,$,2,200,000n
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