Question

# Berg Dry Cleaners has determined the following about its​ costs: Total variable expenses are \$41,000​, total...

Berg Dry Cleaners has determined the following about its​ costs: Total variable expenses are \$41,000​, total fixed expenses are \$30,000, and the sales revenue needed to break even is \$50,000.Determine the​ company's current​ 1) sales revenue and​ 2) operating income. ​(​Hint: First, find the contribution margin​ ratio; then prepare the contribution margin income​ statement.). Can you help me out by creating a contribution margin income statement to check if my answers are correct?

Break even point in sales dollar = Fixed expenses / Contribution margin ratio

\$50,000 = \$30,000 / Contribution margin ratio

Contribution margin ratio = \$30,000 / \$50,000

Contribution margin ratio = 60%

Variable expenses ratio = 100% - 60%

= 40%

Compant's current sales revenue = Total variable expenses / Variable expenses ratio

= \$41,000 / 40%

= \$102,500

 Sales revenue \$102,500 (-) Variable expenses \$41,000 Contribution margin \$61,500 (-) Fixed expenses \$30,000 Operating income \$31,500

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