Question
Exercise 6-7 PDQ Repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil changerelated services
Exercise 6-7
PDQ Repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil changerelated services represent60% of its sales and provide a contribution margin ratio of15%. Brake repair represents40% of its sales and provides a45% contribution margin ratio. The companys fixed costs are $15,550,000(that is, $77,750per service outlet).
Calculate the dollar amount of each type of service that the company must provide in order to break even.(Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.25 and round final answers to 0 decimal places, e.g. 2,510.)
Oil changes | $ |
Brake repair | $ |
The company has a desired net income of $50,000per service outlet. What is the dollar amount of each type of service that must be performed by each service outlet to meet its target net income per outlet?(Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.25 and round final answers to 0 decimal places, e.g. 2,510.)
Oil changes | $ |
Brake repair | $ |
I have tried twice to work this out and done similar practice problems and get them all wrong. I am not understanding where I am going wrong. Can someone post the way to work this out and answer so I know what I am doing?
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