The average Costco warehouse in the United States generates an average of ($127,000,000) of net sales. When
Question:
The average Costco warehouse in the United States generates an average of \($127,000,000\) of net sales. When opening a new warehouse, Costco managers will measure the warehouse's success by how quickly its sales exceed the breakeven point. Assume that Costco's selling, general, and administrative (SG&A) expenses are fixed costs and that merchandise costs are the only variable costs. Use this information for fiscal year 2006 to calculate a breakeven point per ware- house. Round dollar amounts to the nearest thousand dollars.
1. Calculate the average number of warehouses open during 2006 by adding the beginning- and end-of-year amounts and dividing by 2.
2. Calculate SG&A expenses per warehouse.
3. Calculate the contribution margin rate.
4. Use this information to calculate breakeven sales dollars for 2006.
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