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Gilbert's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $670,000 and a contribution margin of 80% of revenues. Gilbert 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. Gilbert's contribution margin has shrunk to 60% of revenues. The company's monthly operating income, prior to these pressures, was $170,000. Read the requirements. Requirement 1. To maintain this same level of profit, what sales volume (in sales revenue) must Gilbert now achieve? i X Requirements Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. ( Fixed expenses + Operating income 17 Contribution margin ratio = Target sales in dollars (Round your answer up to the nearest whole dollar.) 1. To maintain this same level of profit, what sales volume (in sales revenue) must Gilbert now achieve? 2. Gilbert believes that his monthly sales revenue will only go as high as $1,050,000. He is thinking about moving operations overseas to cut fixed costs. If monthly sales are $1,050,000, by how much will he need to cut fixed costs to maintain his prior profit level of $170,000 per month? Gilbert must now achieve sales of $ to maintain the same level of profit

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