Nolan Dry Cleaners has determined the following about its costs: Total variable expenses are $40,000 , total fixed expenses are $30,000, and the sales revenue needed to break even is $40,000. 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.)

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Business

Solomon Pugh

8 February, 11:05

Nolan Dry Cleaners has determined the following about its costs: Total variable expenses are $40,000 , total fixed expenses are $30,000, and the sales revenue needed to break even is $40,000. 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.)

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Rey Friedman · Answer 1

Operating income = 40,000

Explanation:

Giving the following information:

Total variable expenses are $40,000 , total fixed expenses are $30,000, and the sales revenue needed to break even is $40,000.

Sales = operating income + fixed costs + variable costs

Sales = 40,000 + 30,000 + 40,000 = 110,000

Operating income:

Sales = 110,000

Variable costs = 40,000

Gross profit = 70,000

Fixed costs = 30,000

Operating income = 40,000