(Solved): E6-24 (Algo) Computing Target Profit, Preparing Contribution Margin Income Statement, Computing Ma ...

E6-24 (Algo) Computing Target Profit, Preparing Contribution Margin Income Statement, Computing Margin of Safety [LO 6-2, 6-3] Erin Shelton, Incorporated, wants to earn a target profit of $\$940,000$ this year. The company's fixed costs are expected to be $\$1,280,000$ and its variable costs are expected to be 75 percent of sales. Erin Shelton, Incorporated, earned $\$840,000$ in profit last year. Required: 1. Calculate break-even sales for Erin Shelton, Incorporated. 2. Prepare a contribution margin income statement on the basis of break-even sales. 3. Calculate the required sales to meet the target profit of $\$940,000$. 4. Prepare a contribution margin income statement based on sales required to earn a 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? Complete this question by entering your answers in the tabs below. Calculate break-even sales for Erin Shelton, Incorporated. Prepare a contribution margin income statement on the basis of break-even sales. Note: Do not leave any cells blank. Enter a ' 0 ' wherever necessary. Calculate the required sales to meet the target profit of $\$940,000$. Prepare a contribution margin income statement based on sales required to earn a target profit of $\$940,000$. When the company earns $\$940,000$ of net income, what is its margin of safety and margin of safety as a percentage of sales? Note: Round your "Percentage Sales" answer to 2 decimal places. (i.e. 0.1234 should be entered as $12.34\%$.).