Question
PDQ Repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil changerelated services represent 60%
PDQ Repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil changerelated services represent 60% of its sales and provide a contribution margin ratio of 25%. Brake repair represents 40% of its sales and provides a 25% contribution margin ratio. The companys fixed costs are $15,780,000 (that is, $78,900 per service outlet).
1.) Calculate the dollar amount of each type of service that the company must provide in order to break even.
2.) The company has a desired net income of $50,000 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?
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