Question
Quick 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
Quick 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 70% of its sales and provide a contribution margin ratio of 20%. Brake repair represents 30% of its sales and provides a 60% contribution margin ratio. The company's fixed costs are $12,000,000 (that is, $60,000 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 $40,000 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? (a) The weighted-average contribution margin ratio is: _________% The breakeven in dollars for the company as a whole is $____________________ The dollar amount for oil changes at the breakeven is sales figure is: $________________ The dollar amount for brake repair at the breakeven is sales figure is: $________________ (b) The sales figure to achieve the target net income is: $____________________ The oil change sales dollars needed to achieve the target net income is: $_______________ The brake repair sales dollars needed to achieve the target net income is: $_____________
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