Contribution Margin Concepts

The following information is taken from the $2017$ records of Hendrix's Guitar Center.

Fixed Variable Total

Sales $$1,875,000$

Costs

Goods sold $843,750$

Labor $$400,000150,000$

Supplies $5,00012,500$

Utilities $30,00032,500$

Rent $60,0000$

Advertising $15,00061,250$

Miscellaneous $15,00025,000$

Total costs $$525,000$ $$1,125,000(1,650,000)$

Net income $ $225,000$

Required

$($a$.)$ Determine the annual break$-$even dollar sales volume.

Contribution margin ratio: Answer

Annual break$-$even dollar sales volumes: $Answer

$($b$.)$ Determine the current margin of safety in dollars.

$Answer

$($c$.)$ What is the annual break$-$even dollar sales volume if management makes a decision that increases fixed costs by $$80,000?$

$Answer