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

		Fixed	Variable	Total
Sales				$1,125,000
Costs
Goods sold			506,250
Labor		$240,000	90,000
Supplies		3,000	7,500
Utilities		18,000	19,500
Rent		36,000	0
Advertising		9,000	36,750
Miscellaneous		9,000	15,000
Total costs		$315,000	$675,000	(990,000)
Net income				$ 135,000

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

(d.) What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by $40,000?

$Answer