Mike's Bikes is thinking about carrying a new line of adult tricycles. To carry this new line, Mike's Bikes would have to invest $27,210 in training and equipment. The new bikes would earn Mike's Bikes a 33% contribution margin as percent of selling price. Mike's Bikes will not take on the new line unless the company is assured of earning a 14% return on sales. Calculate breakeven sales in DOLLARS, while achieving the ROS% target. (Rounding: penny.)
Mike's Bikes is thinking about carrying a new line of adult tricycles. To carry this new line, Mike's Bikes would have to invest $27,210 in training and equipment. The new bikes would earn Mike's Bikes a 33% contribution margin as percent of selling price. Mike's Bikes will not take on the new line unless the company is assured of earning a 14% return on sales. Calculate breakeven sales in DOLLARS, while achieving the ROS% target. (Rounding: penny.)
Break even point for target profit means the point at which company is recovering its fixed costs and variable costs and also its net income will be equal to target profit.
Break even Sales = Fixed Costs/(Contribution Margin ratio - Target profit ratio)
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