Break-Even in Sales Revenue, Margin of Safety

Sports-Reps, Inc., represents professional athletes and movie and television stars. The agency had revenue of $12,300,000 last year, with total variable costs of $6,150,000 and fixed costs of $2,050,000.

Required:

1. What is the contribution margin ratio for Sports-Reps based on last years data? Round your answer to two decimal places. (Express as a decimal-based amount rather than a whole percent.) fill in the blank 1

What is the break-even point in sales revenue? $fill in the blank 2

2. What was the margin of safety for Sports-Reps last year? $fill in the blank 3

3. One of Sports-Repss agents proposed that the firm begin cultivating high school sports stars around the nation. This proposal is expected to increase revenue by $250,000 per year, with increased fixed costs of $123,500. Is this proposal a good idea?

YesNo