Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. the skateboard zone, inc. income statement for the

The Skateboard Zone, Inc. Income Statement For the period ended December 31, 2020 ...

80.2K

Verified Solution

Question

Accounting

The Skateboard Zone, Inc.

Income Statement

For the period ended December 31, 2020

Sales

$800,000

Cost of goods sold

300,000

Gross Margin

500,000

Selling and administrative expenses:

Selling expenses

$250,000

Administrative expenses

160,000

410,000

Net operating income

$90,000

Skateboards sell, on the average, for $400 each. The company does not make the skateboards: it purchases them from a supplier for $150 per skateboard. Variable selling expenses are $50 per skateboard sold. The remaining selling expenses are fixed. The administrative expenses are 25% variable and 75% fixed.

Required:

  1. Redo the income statement in the contribution margin format.
  2. Calculate the contribution margin per unit and contribution margin ratio.
  3. Calculate the breakeven point in units and in dollars of sales.
  4. Calculate the margin of safety and margin of safety percentage.
  5. Calculate the degree of operating leverage.
  6. The company would like to earn $180,000 of net operating income. What will be the required sales in units and in dollars?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students