Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

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: $_____________

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions