80.2K

Verified Solution

Link Copied!

Instructions Arberg Company's controller prepared the following budgeted income statement for the coming year: Sales $416,000 Variable cost 291.200 Contribution margin $124,800 Fixed cost 73,500 Operating income $51,300 Required: 1. What is Arberg's variable cost ratio? What is its contribution margin ratio? 2. Suppose Arberg's actual revenues are $30,200 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement 3. How much sales revenue must Arberg earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer. 4. What is Arberg's expected margin of safety? 5. What is Arberg's margin of safety if sales revenue is $377,000? Amount Descriptions Refer to the list below for the exact wording of text items within your income statement Amount Descriptions Operating income Operating loss Sales Total contribution margin Fixed cost Variable cost Ratios and Revenue 1. What is Arberg's variable cost ratio? What is its contribution margin ratio? Variable cost ratio % Contribution margin ratio % 2. Suppose Arberg's actual revenues are $30,200 more than budgeted. By how much will operating income increase? $ 3(a) How much sales revenue must Arberg earn to break even? $ Contribution Margin Income Statement 3(b) Prepare a contribution margin income statement to verify the accuracy of your answer. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement Arberg Company Contribution Margin Income Statement For the Coming Year 2 3 4 5 Margin of Safety 4. What is Arberg's expected margin of safety? 5. What is Arberg's margin of safety if sales revenue is $377,000

Answer & Explanation Solved by verified expert

See Answer