Question
Beauty Co is a small company that makes two products, nail polish and lipsticks. Nail polish sales make up 30% of total sales, and their
Beauty Co is a small company that makes two products, nail polish and lipsticks. Nail polish sales make up 30% of total sales, and their variable costs are 45% as a percentage of sales value. The total budgeted revenue is expected to be $400,000. Lipstick sales are 70% of the total sales, and their variable costs are 40% as a percentage of the sales value. The total budgeted revenue is expected to be $600,000. Total fixed costs are $400,000 for the company. The managing director has recently signed an agreement with an investor, which requires a minimum of $100,000 profit to be given every year. 4) What is the breakeven revenue (or Break-even Sales) for Beauty Co? (10 marks) A. $400,000 B. $431,631 C. $683,761 D. $783,761 Note: write the margin of safety formula. Apply the formula and calculate.
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