Question

For its top managers, Goldberg Industries formats its income statement as follows: GoldBerg Industries Contribution Margin Income Statement Three Months Ended October 31, 2019 Net Sales Revenue $ 490,200 Variable Costs 294,120 Contribution Margin 196,080 Fixed Costs 173,000 Operating Income $ 23,080 What would be the outcome if this contribution margin income statement were prepared at the $377,000 sales level? (*The proportion of each sales dollar that goes toward variable costs is consistent within the relevant range.)

Answer 1

Answer:

The outcome will be a net loss for 22,200

Explanation:

$\left[\begin{array}{ccc}Sales&490,200&377,000\\variable \: cost&-294,120&-226,200\\contibution&196,080&150,800\\fixed \:cost&-173,000&-173,000\\net \: income&23,080&-22,200\\\end{array}\right]$

284120/490200 = 0.6 variable cost weight

377,000 x 0.6 = 226,200 variable cost