Contribution Margin Concepts The following information is taken from the 2017 records of Hendrix's Guitar Center. Fixed Variable Total Sales Costs Goods sold Labor Supplies Utilities Rent Advertising Miscellaneous Total costs Net income Required 506,250 90,000 7,500 19,500 $240,000 3,000 18,000 36,000 0 9,000 9,000 36,750 15,000 $1,125,000 $315,000 $675,000 (990,000) $ 135,000 (a.) Determine the annual break-even dollar sales volume. Contribution margin ratio: Answer Annual break-even dollar sales volumes: $Answer (b.) Determine the current margin of safety in dollars. $Answer (d.) What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by $40,000? $Answer
Contribution Margin Concepts The following information is taken from the 2017 records of Hendrix's Guitar Center. Fixed Variable Total Sales Costs Goods sold Labor Supplies Utilities Rent Advertising Miscellaneous Total costs Net income Required 506,250 90,000 7,500 19,500 $240,000 3,000 18,000 36,000 0 9,000 9,000 36,750 15,000 $1,125,000 $315,000 $675,000 (990,000) $ 135,000 (a.) Determine the annual break-even dollar sales volume. Contribution margin ratio: Answer Annual break-even dollar sales volumes: $Answer (b.) Determine the current margin of safety in dollars. $Answer (d.) What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by $40,000? $Answer
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Contribution Margin Concepts
The following information is taken from the 2017 records of Hendrix's Guitar Center.
Fixed Variable
Total
Sales
Costs
Goods sold
Labor
Supplies
Utilities
Rent
Advertising
Miscellaneous
Total costs
Net income
Required
$240,000
3,000
18,000
36,000
9,000
9,000
506,250
90,000
7,500
19,500
0
36,750
15,000
$1,125,000
$315,000 $675,000 (990,000)
$ 135,000
(a.) Determine the annual break-even dollar sales volume.
Contribution margin ratio: Answer
Annual break-even dollar sales volumes: $Answer
(b.) Determine the current margin of safety in dollars.
$Answer
(d.) What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by
$40,000?
$Answer
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