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%E7-26A (similar to) Question Help Gary's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $640,000 and a contribution margin of 85% of revenues. Gary feels like he's in a giant squeeze play. The automotive manufacturers are demanding lower prices, and the steel producers have increased raw material costs. Gary's contribution margin has shrunk to 65% of revenues. The company's monthly operating income, prior to these pressures, was $227,000. Read the requirements Requirement 1. To maintain this same level of profit, what sales volume in sales revenue) must Gary now achieve? Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. i Fixed expenses Operating income 1 Contbution margin ratio - Target sales in dollars (Round your answer up to the nearest whole dollar) Gary must now achieve saks of $ 1,333,817 to maintain the same level of profil Requirement 2. If monthly sales are $1,020 000, by how much will he need to cut fixed costs to maintain his prior profit level of $227,000 per month? Fixed expenses can only be $ will have to save at least $ prior profit level. in order to maintain the prior profit level of $227,000 per month Therefore, Gary per month in fixed costs by moving operations overseas if he plans to maintain his

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