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Netto provides primarily two lines of service: designing and consulting. Designing-related services represent 60% of its revenue and provide a contribution margin ratio of 30%.
Netto provides primarily two lines of service: designing and consulting. Designing-related services represent 60% of its revenue and provide a contribution margin ratio of 30%. Consulting services represent 40% of its revenue and provide a 40% contribution margin ratio. The companys fixed costs are 4,250,000.
- Calculate the revenue from each type of service that the company must achieve to break even.
- The company has a desired net income of 1,700,000. What amount of revenue would Netto earn from consulting services if it achieves this goal with the current sales mix?
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