Global Travel uses the contribution margin income statement internally. Global's first-quarter results are as follows:
Sales revenue $525,000
Less: Variable expenses: 210,000
Contribution Margin $315,000
Less: Fixed Expenses 172,000
Operating Income $142,800
Global's relevant range is sales of between $120,000 and $630,000.
1. Prepare contribution margin income statements at sales levels of $230,000 and $400,000.
(Hint: Use the contribution margin ratio.)
2. Begin by preparing the contribution margin income statement at the $230,000.
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