Use the information from the following Income Statement to create and Projected

Question

Use the information from the following Income Statement to create and Projected Income Statement and solve the questions at bottom of the page. Complete the Income State to reflect the expected sales increase, then also complete the grey cells at the bottom of the page. Complete the other two spreadsheets in this workbook and after doing all the calculations discuss the impact of variable versus fixed expenses. Include in your conclusion which company you think is in the better financial situation and why. Use 3-4 paragraphs for your total discussion. Income Statement Projected Income Statement Sales Revenue $2,500,000 Variable Costs Purchases $750,000 0.3 Direct labor $600,000 0.24 $1,350,000 $1,150,000 Fixed Costs Selling $500,000 Administrative $485,000 Manufacturing Overhead $150,000 $1,135,000 Profit Dollars Percentage Calculate the Contribution Margin Calculate the Gross Margin Ratio Calculate Breakeven Sales Calculate Margin of Safety based on the 5% expected sales increase. Use the information from the following Income Statement to create and Projected Income Statement and solve the questions at bottom of the page. Complete the Income State to reflect the expected sales increase, then also complete the grey cells at the bottom of the page. Complete the other two spreadsheets in this workbook and after doing all the calculations discuss the impact of variable versus fixed expenses. Include in your conclusion which company you think is in the better financial situation and why. Use 3-4 paragraphs for your total discussion. Income Statement Projected Income Statement Sales Revenue $2,500,000 Variable Costs Purchases $750,000 0.3 Direct labor $600,000 0.24 $1,350,000 $1,150,000 Fixed Costs Selling $500,000 Administrative $485,000 Manufacturing Overhead $150,000 $1,135,000 Profit Dollars Percentage Calculate the Contribution Margin Calculate the Gross Margin Ratio Calculate Breakeven Sales Calculate Margin of Safety based on the 5% expected sales increase.

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer    Statementshowing Computations Paticulars Amount Percentage Sales        2,500,000.00 Less Variable Expenses Purchases            750,000.00 Direct Labour            600,000.00 Total Variable costs        1,350,000.00 Contribution Margin = Sales - VC        1,150,000.00 46.00% Fixed cost Selling            500,000.00 Administrative            485,000.00 Manufacturing overhead            150,000.00 Total Fixed costs        1,135,000.00 Net operating income              15,000.00 Gross margin = Sales - purchases - Direct labour - Manu Overhead        1,000,000.00 40% Break even sales = 1135,000/46%        2,467,391.30 MOS = 2.5m*1.05 - 2467,391.30            157,608.70 MOS in % = 157,608.70/2.5m*1.05 6.00%

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