Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Oriole Repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil changerelated services represent 80%

Oriole Repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil changerelated services represent 80% of its sales and provide a contribution margin ratio of 20%. Brake repair represents 20% of its sales and provides a 45% contribution margin ratio. The companys fixed costs are $15,580,000 (that is, $77,900 per service outlet). Sales mix is determined based upon total sales dollars.

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.)

Sales Dollars Needed Per Product

Oil changes

$enter a dollar amount

Brake repair

$enter a dollar amount

The company has a desired net income of $54,000 per 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.)

Sales Dollars Needed Per Service Outlet

Oil changes

$enter a dollar amount

Brake repair

$enter a dollar amount

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Fundamentals of Corporate Finance

Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates

3rd edition

1118845897, 978-1118845899

Students also viewed these Accounting questions

Question

Disordered eating in dance professionals

Answered: 1 week ago