Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Nippon Company provides primarily two lines of service: accounting and tax. Accounting-related services represent 60% of its revenue and provide a contribution margin ratio of

Nippon Company provides primarily two lines of service: accounting and tax. Accounting-related services represent 60% of its revenue and provide a contribution margin ratio of 30%. Tax services represent 40% of its revenue and provide a 45% contribution margin ratio. The company's fixed costs are $9,000,000. Instructions 1. Calculate the revenue in total and then from each type of service that the company must achieve to break even. 2. The company has a desired net income of $1,800,000. What amount of revenue would Nippon earn from tax services if it achieves this goal with the current sales mix? 3. Calculate the company's degree of operating leverage, assuming the desired net income of $1,800,000 and expected contribution margin are achieved.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental Accounting Principles

Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta

20th Edition

1259157148, 78110874, 9780077616212, 978-1259157141, 77616219, 978-0078110870

More Books

Students also viewed these Accounting questions

Question

1. What does this mean for me?

Answered: 1 week ago