Refer to Target Corporation's Consolidated Results of Operations, included in the financial statements in Appendix A. Ignoring
Question:
Refer to Target Corporation's Consolidated Results of Operations, included in the financial statements in Appendix A. Ignoring interest expense and taxes, answer the following ques- tions: 1. Is Target Corporation's cost of sales a fixed cost or a variable cost? Is depreciation and amortization a fixed cost or a variable cost? Explain. 2. Assume that 40% of Target's selling, general, and administrative expenses are fixed costs. What is the contribution margin? (Hint: Use sales revenues rather than total revenues in your calculations.) 3. What is the contribution margin ratio? (Carry your computation to 5 decimal places.) 4. What is the breakeven sales in dollars? 5. Calculate the margin of safety in dollars as sales revenue less breakeven sales in dollars. What is the margin of salety as a percentage? 6. Target division's sales are growing faster than sales in either the Mervyn's or the Department Stores divisions. Since Target stores are the lowest margin division, how will this change in sales mix affect the corporation's breakeven point?
Step by Step Answer:
Accounting
ISBN: 9780130906991
5th Edition
Authors: Charles T. Horngren, Walter T. Harrison, Linda S. Bamber, Betsy Willis, Becky Jones