Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Only last part please Xavier Medical Supply is a retailer of home medical equipment. Last year, Xavier's sales revenues totaled $6,100,000. Total expenses were $2,590,000.

image text in transcribedOnly last part please

Xavier Medical Supply is a retailer of home medical equipment. Last year, Xavier's sales revenues totaled $6,100,000. Total expenses were $2,590,000. Of this amount, approximately $1,342,000 were variable, while the remainder were fixed. Since Xavier's offers thousands of different products, its managers prefer to calculate the breakeven point in terms of sales dollars rather than units. Read the requirements. The operating income is $ 3,510,000 Requirement 2. What is Xavier's contribution margin ratio? Begin by identifying the formula to compute the contribution margin ratio. Contribution margin Sales revenue Contribution margin ratio (Enter the ratio as a whole percent.) The contribution margin ratio is 78 %. Requirement 3. What is the company's breakeven point in sales dollars? (Hint: The contribution margin ratio calculated in Requirement 2 is already weighted by the company's actual sales mix.) Begin by identifying the formula to compute the breakeven point in sales dollars. ( Fixed expenses + Operating income ) Contribution margin ratio = Breakeven sales in dollars (Round your answer up to the nearest whole dollar.) The breakeven point in sales dollars is $ 1,600,000 Requirement 4. Xavier's top management is deciding whether to embark on a $250,000 advertising campaign. The marketing firm has projected annual sales volume to increase by 16% as a result of this campaign. Assuming that the projections are correct, what effect would this advertising campaign have on the company's annual operating income? rise by If Xavier embarks on this advertising campaign, sales revenue and variable costs will will cause the contribution margin to increase by 16 %. However, fixed costs will the advertising 16 %, which $ 250,000 due to rise by What effect would this advertising campaign have on Xavier's annual operating income? The effect would be an increase in operating income of

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

Auditing In The Public Sector Efficiency Economy And Program Results

Authors: James L. Savage, Felix Pomeranz, Alfred J. Cancellieri, Joseph B. Stevens

1st Edition

0882621238, 978-0882621234

More Books

Students also viewed these Accounting questions

Question

c. What were you expected to do when you grew up?

Answered: 1 week ago