Wildhorse Repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil change-related services represent 70% of its sales and provide a contribution margin ratio of 20%. Brake repair represents 30% of its sales and provides a 40% contribution margin ratio. The company's fixed costs are $13,416,000 (that is, $67,080 per service outlet). Sales mix is determined based upon total sales dollars.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
**Wildhorse Repairs Financial Analysis**

Wildhorse Repairs operates 200 auto-maintenance service outlets nationwide. It offers two main services: oil changes and brake repair. Here is a breakdown of their financial operations:

**Service Details:**
- **Oil Change Services:**
  - Represents 70% of sales
  - Contribution Margin Ratio: 20%
  
- **Brake Repair Services:**
  - Represents 30% of sales
  - Contribution Margin Ratio: 40%

**Company Financials:**
- Fixed Costs: $13,416,000
  - Which is approximately $67,080 per service outlet

**Objective:**
Calculate the required sales dollars for each type of service to achieve the break-even point using a Weighted-Average Contribution Margin Ratio.

**Instructions:**
- Round the Weighted-Average Contribution Margin Ratio to 2 decimal places.
- Round final sales dollar calculations to 0 decimal places.

**Results:**

| Service Type   | Sales Dollars Needed |
|----------------|-----------------------|
| Oil Changes    | $36,120,000           |
| Brake Repair   | $15,480,000           |

All calculations ensure that the business reaches its break-even point, balancing costs with revenue.
Transcribed Image Text:**Wildhorse Repairs Financial Analysis** Wildhorse Repairs operates 200 auto-maintenance service outlets nationwide. It offers two main services: oil changes and brake repair. Here is a breakdown of their financial operations: **Service Details:** - **Oil Change Services:** - Represents 70% of sales - Contribution Margin Ratio: 20% - **Brake Repair Services:** - Represents 30% of sales - Contribution Margin Ratio: 40% **Company Financials:** - Fixed Costs: $13,416,000 - Which is approximately $67,080 per service outlet **Objective:** Calculate the required sales dollars for each type of service to achieve the break-even point using a Weighted-Average Contribution Margin Ratio. **Instructions:** - Round the Weighted-Average Contribution Margin Ratio to 2 decimal places. - Round final sales dollar calculations to 0 decimal places. **Results:** | Service Type | Sales Dollars Needed | |----------------|-----------------------| | Oil Changes | $36,120,000 | | Brake Repair | $15,480,000 | All calculations ensure that the business reaches its break-even point, balancing costs with revenue.
The company has a desired net income of $44,720 per service outlet. What is the dollar amount of each type of service that must be performed by each service outlet to meet its target net income per outlet? **(Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.25 and round final answers to 0 decimal places, e.g. 2,510.)**

**Sales Dollars Needed Per Service Outlet**

- Oil changes: $ [input box]

- Brake repair: $ [input box]
Transcribed Image Text:The company has a desired net income of $44,720 per service outlet. What is the dollar amount of each type of service that must be performed by each service outlet to meet its target net income per outlet? **(Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.25 and round final answers to 0 decimal places, e.g. 2,510.)** **Sales Dollars Needed Per Service Outlet** - Oil changes: $ [input box] - Brake repair: $ [input box]
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Quality control
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.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education