1. Artis Sales has two store locations. Store A has fixed costs of $210,000 per month and a variable cost ratio of 60%. Store B has fixed costs of $390,000 per month and a variable cost ratio of 30%. What is the break-even sales volume for Store A?

2. Liu Sales has two store locations. Sanford has fixed costs of $169,000 per month and a contribution margin ratio of 30%. Orlando has fixed costs of $400,000 per month and a contribution margin ratio of 70%. At what sales volume would the two stores have equal profits or losses?

3.

Travon's Limo Service provides transportation services in and around Bentonville. Its profits have been declining, and management is planning to add a package delivery service that is expected to increase revenue by $275,000 per year. The total cost to lease additional delivery vehicles from the local dealer is $60,000 per year. The present manager will continue to supervise all services. However, labor and utilities costs will increase by 40% and rent and other costs will increase by 15% when the package delivery service is added.

Travons Limo Service
Annual Income Statement
Before Expansion
Sales Revenue					$	960,000
Costs:
Vehicle leases	$	400,000
Labor		290,000
Utilities		50,000
Rent		100,000
Other Costs		60,000
Managers Salary		120,000
Total Costs						1,020,000
Operating Profit (Loss)					$	(60,000	)

a. Prepare a report of the differential costs and revenues if the delivery service is added. b. Should management start up the delivery service? Explain your answer.