Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 70%

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 70% of its sales and provide a contribution margin ratio of 20%. Brake repair

represents 30% of its sales and provides a 40% contribution margin ratio. The companys

fi xed costs are $15,600,000 (that is, $78,000 per service outlet).

Instructions

(a) Calculate the dollar amount of each type of service that the company must provide in

order to break even.

(b) The company has a desired net income of $52,000 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?

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

Contemporary Auditing Real Issues And Cases

Authors: Michael C. Knapp, Loreen Knapp

4th Edition

0324048610, 9780324048612

More Books

Students also viewed these Accounting questions

Question

Give some examples of how sources of systemic risk are connected.

Answered: 1 week ago

Question

I would have had to wait a long time for a reply.

Answered: 1 week ago

Question

Id already thrown away the receipt.

Answered: 1 week ago