Western Travel uses the contribution margin income statement internally. Western's first-quarter results are as follows:
Western Travel
Contribution Margin Income Statement
Three Months Ended March 31
Sales Revenue--------------------------------------------------------------------------$500,000
Less: Variable expenses--------------------------------------------------------------100,000
Contribution margin-----------------------------------------------------------------$400,000
Less: Fixed expenses------------------------------------------------------------------174,000
Operating income-------------------------------------------------------------------- $226,000
Western's relevant range is sales of between $100,000 and $700,000.
Question 1) Prepare contribution margin income statements at sales levels of $255,000 and $363,000. (Hint use contribution margin ratio.)
Question 2) Compute breakeven sales in dollars.