Gordon Manufacturing earned net income of $100,000 during 2011. The company want

Question

Gordon Manufacturing earned net income of $100,000 during 2011. The company wants to earn net income of $40,000 more during 2012. The company's fixed costs are expected to be $105,000, and variable costs are expected to be 30% of sales. Instructions (a) Determine the required sales to meet the target net income during 2012. (b) Fill in the dollar amounts for the summary income statement for 2012 below, based on your answer to part (a). Sales revenue $ Variable costs Contribution margin Fixed costs Net income $

Explanation / Answer

Hi, Part A= (105000 + 140000)/70% (Contribution Margin Ratio) = 350000 Part B Sales = 350000 Variable Cost = 105000 Contribution = 245000 Fixed Cost = 105000 Profit = 140000 Thanks, Aman

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