Contribution Margin Concepts

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

Fixed Variable Total

Sales $$1,500,000$

Costs

Goods sold $675,000$

Labor $$320,000120,000$

Supplies $4,00010,000$

Utilities $24,00026,000$

Rent $48,0000$

Advertising $12,00049,000$

Miscellaneous $12,00020,000$

Total costs $$420,000$ $$900,000(1,320,000)$

Net income $ $180,000$

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 $$60,000?$

$Answer