Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Profitability Analysis Assume Strands Salon, a San Diego hair salon, provides cuts, perms, and hairstyling services. Annual fixed costs are ( $ 2

Profitability Analysis Assume Strands Salon, a San Diego hair salon, provides cuts, perms, and hairstyling services. Annual fixed costs are \(\$ 225,000\), and variable costs are 45 percent of sales revenue. Last year's revenues totaled \(\$ 450,000\).(a) Determine its break-even point in sales dollars. Round your answer to the nearest dollar. \(\$ \)(b) Determine last year's margin of safety in sales dollars. Round your answer to the nearest dollar. \(\$ \)(c) Determine the sales dollar volume required for an annual pretax profit of \(\$ 200,000\). Round your answer to the nearest dollar. \(\$ \)Assume Strands Salon, a San Diego hair salon, provides cuts, perms, and hairstyling services. Annual
fixed costs are $225,000, and variable costs are 45% of sales revenue. Last year's revenues totaled
$450,000.
Required
a. Determine its break-even point in sales dollars.
b. Determine last year's margin of safety in sales dollars.
c. Determine the sales dollar required for an annual pretax profit of $200,000.
image text in transcribed

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

Accounting Principles

Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso

11th Edition

111856667X, 978-1118566671

More Books

Students also viewed these Accounting questions