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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
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 $2,000,000. Required: 1. What is the contribution margin ratio for Sports-Reps based on last year's data? Round your answer to two decimal places. (Express as a decimal-based amount rather than a whole percent.) What is the break-even point in sales revenue? 2. What was the margin of safety for Sports-Reps last year? 3. One of Sports-Reps's agents proposed that the firm begin cultivating high school sports stars around the nation. This proposal is expected to increase revenue by $220,000 per year, with increased fixed costs of $108,300. Is this proposal a good idea?
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