Question
Calculate the contribution margin ratios for audio, video, and car products What would be the effect on profit of a $125,000 increase in sales of
Calculate the contribution margin ratios for audio, video, and car products
What would be the effect on profit of a $125,000 increase in sales of audio equipment compared with a $125,000 increase in video equipment or a $125,000 increase in sales of car equipment? Based on this limited information, which product line would you recommend expanding?
Calculate the break-even level of sales dollars for the company as a whole
Calculate sales needed to achieve a profit of $1800, 000, assuming the current mix.
Determine the sales of audio, video, and care products in the total sales amount calculated for part d.
| Audio | Video | Car | Total | |
| sales | 32,500,000 | 1,950,000 | 13,000,000 | 6,500,000 |
| Less: Variable Cost: | ||||
| Cost of merchandise | 1,920,000 | 1,374,000 | 617,000 | 3,911,000 |
| Salary part time staff | 192,500 | 108,000 | 59,000 | 359,500 |
| Total Variable cost | 2,112,500 | 1,482,000 | 676,000 | 4,270,500 |
| Contributio Margin | 1,137,500 | 468,000 | 624,000 | 2,229,500 |
| Less direct fixed costs | ||||
| salary, full-time staff | 325,000 | 240,000 | 220,000 | 785,000 |
| Total Variable cosst | $812,500 | $228,000 | $404,000 | 1,444,500 |
| Less common fixed costs: | ||||
| Advertising | 115,000 | |||
| utilities | 25,000 | |||
| other admin. Cost | 570,000 | |||
| Total common fixed cost | 710,000 | |||
| Profit | $734,500 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started