Contribution Margin Concepts The following information is taken from the 2017 records of Hendrix's Guitar Center. Sales Costs Goods sold Labor Supplies Utilities Rent $400,000 5,000 30,000 60,000 Advertising 15,000 Miscellaneous 15,000 Net income Fixed Variable Required Total costs $525,000 $1,125,000 (1,650,000) $225,000 843,750 150,000 12,500 32,500 0 61,250 25,000 Total $1,875,000 (a.) Determine the annual break-even dollar sales volume. Contribution margin ratio: 0 Annual break-even dollar sales volumes: $ 0 $0 (b.) Determine the current margin of safety in dollars. $0 (c.) What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by $80,000?
Contribution Margin Concepts The following information is taken from the 2017 records of Hendrix's Guitar Center. Sales Costs Goods sold Labor Supplies Utilities Rent $400,000 5,000 30,000 60,000 Advertising 15,000 Miscellaneous 15,000 Net income Fixed Variable Required Total costs $525,000 $1,125,000 (1,650,000) $225,000 843,750 150,000 12,500 32,500 0 61,250 25,000 Total $1,875,000 (a.) Determine the annual break-even dollar sales volume. Contribution margin ratio: 0 Annual break-even dollar sales volumes: $ 0 $0 (b.) Determine the current margin of safety in dollars. $0 (c.) What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by $80,000?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Contribution Margin Concepts
The following information is taken from the 2017 records of Hendrix's Guitar Center.
Sales
Costs
Goods sold
Labor
Supplies
Utilities
Rent
Required
Fixed Variable
843,750
150,000
12,500
32,500
0
61,250
25,000
$400,000
5,000
30,000
60,000
Advertising
15,000
Miscellaneous 15,000
Total costs $525,000 $1,125,000 (1,650,000)
Net income
$ 225,000
Total
$1,875,000
(a.) Determine the annual break-even dollar sales volume.
Contribution margin ratio: 0
Annual break-even dollar sales volumes: $ 0
$0
(b.) Determine the current margin of safety in dollars.
$0
(c.) What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by $80,000?
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