Questions:
Erin Shelton, Inc., wants to earn a target profit of $940,000 this year. The companyAc€?cs fixed costs are expected to be $1,280,000 and its variable costs are expected to be 75 percent of sales. Erin Shelton, Inc., earned $840,000 in profit last year.
Required:
1. Calculate break-even sales for Erin Shelton, Inc.
2. Prepare a contribution margin income statement on the basis break-even sales.
3. Calculate the required sales to meet the target profit of $940,000.
4. Using a contribution margin income statement format with the sales to meet the target profit of $940,000.
5. When the company earns $940,000 of net income, what is its margin of safety and margin of safety as a percentage of sales? (Round your "Percentage Sales" answer to 2 decimal places.)