Calculate operating income if sales volume increases by 20%.

Prepare a contribution margin format income statement; calculate break-even point Presented here is the income statement for Edwards Co. for February:

Sales

$80,000

Cost of goods sold

48,000

Gross profit

$32,000

Operating expenses

21,200

Operating income

$10,800

Based on an analysis of cost behavior patterns, it has been determined that the company’s contribution margin ratio is 35%.

Required:

a. Rearrange the preceding income statement to the contribution margin format.

b. Calculate operating income if sales volume increases by 20%.

c. Calculate the amount of revenue required for Edwards to break even.