Problem 1, 15 points:
Elm, Inc. had the following income statement for last period:
Sales
$50,000
Cost of Sales (manufacturing)
24,000
Selling and General Administrative
6,000
Net Income
$20,000
Costs of sales were 75% variable and 25% fixed, and Selling and General Expense was 60%
variable and 40% fixed.
Required:
1. Prepare a contribution format income statement in good form.
2. Calculate the contribution margin percentage.
3. Calculate the break-even sales in dollars.
4. Calculate the margin of safety.
Be sure to number and properly label each part of your answer.