Contribution Margin ConceptsThe following information is taken from the 2017 records of Hendrix's Guitar Center. Fixed Variable Total Sales $1,125,000 Costs Goods sold 506,250 Labor $240,000 90,000 Supplies 3,000 7,500 Utilities 18,000 19,500 Rent 36,000 0 Advertising 9,000 36,750 Miscellaneous 9,000 15,000 Total costs $315,000 $675,000 (990,000) Net income $ 135,000 Required Determine the annual break-even dollar sales volume. Contribution margin ratio: $AnswerAnnual break-even dollar sales volumes: $Answer Determine the current margin of safety in dollars. What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by $40,000?
Contribution Margin ConceptsThe following information is taken from the 2017 records of Hendrix's Guitar Center. Fixed Variable Total Sales $1,125,000 Costs Goods sold 506,250 Labor $240,000 90,000 Supplies 3,000 7,500 Utilities 18,000 19,500 Rent 36,000 0 Advertising 9,000 36,750 Miscellaneous 9,000 15,000 Total costs $315,000 $675,000 (990,000) Net income $ 135,000 Required Determine the annual break-even dollar sales volume. Contribution margin ratio: $AnswerAnnual break-even dollar sales volumes: $Answer Determine the current margin of safety in dollars. What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by $40,000?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Contribution Margin Concepts
The following information is taken from the 2017 records of Hendrix's Guitar Center.
| Fixed | Variable | Total | ||
|---|---|---|---|---|
| Sales | $1,125,000 | |||
| Costs | ||||
| Goods sold | 506,250 | |||
| Labor | $240,000 | 90,000 | ||
| Supplies | 3,000 | 7,500 | ||
| Utilities | 18,000 | 19,500 | ||
| Rent | 36,000 | 0 | ||
| Advertising | 9,000 | 36,750 | ||
| Miscellaneous | 9,000 | 15,000 | ||
| Total costs | $315,000 | $675,000 | (990,000) | |
| Net income | $ 135,000 |
Required
- Determine the annual break-even dollar sales volume.
Contribution margin ratio: $Answer
Annual break-even dollar sales volumes: $Answer
- Determine the current margin of safety in dollars.
- What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by $40,000?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education