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14 December, 22:21

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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  1. 14 December, 22:48
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    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
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