Question 2

Rapid Auto has over 200 auto-maintenance service outlets nationwide. It provides primarily two lines of service: oil changes and brake repair. Oil change-related services represent 65% of its sales and provide a contribution margin ratio of 20%. Brake repair represents 35% of its sales and provides a 60% contribution margin ratio. The company's fixed costs are $16,000,000 (that is, $80,000 per service outlet).

Calculate the dollar amount of each type of service that the company must provide in order to break even. (Round computations for weighted-average contribution margin to 2 decimal places, e.g. 10.50, and final answers to 0 decimal places, e.g. 125.) Oil changes $ Break repairs $

The company has a desired net income of $60,000 per service outlet. What is the dollar amount of each type of service that must be provided by each service outlet to meet its target net income per outlet? (Round answers to 0 decimal places, e.g. 125.) Oil changes $ Break repairs $

Question 3

Mega Electronix sells television sets and DVD players. The business is divided into two divisions along product lines. CVP income statements for a recent quarter's activity are presented below.

TV Division DVD Division Total Sales $600,000 $400,000 $1,000,000 Variable costs 450,000 240,000 690,000 Contribution margin $150,000 $160,000 310,000 Fixed costs 124,000 Net income $186,000

Determine sales mix percentage and contribution margin ratio for each division. (Round answers to 2 decimal places, e.g. .50.) Sales Mix Percentage TV Division DVD Division

Contribution margin ratio

TV Division DVD Division

Calculate the company's weighted-average contribution margin ratio. (Round answer to 2 decimal places, e.g. .50.)

Calculate the company's break-even point in dollars. (Use the rounded amount from the previous question when calculating the answer for this question.) $

Determine the sales level in dollars for each division at the break-even point. TV Division $ DVD Division $