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In: Accounting

The manager of Dukey’s Shoe Station estimates operating costs for the year will include $405,000 in...

The manager of Dukey’s Shoe Station estimates operating costs for the year will include $405,000 in fixed costs. Required: a. Find the break-even point in sales dollars with a contribution margin ratio of 50 percent. b. Find the break-even point in sales dollars with a contribution margin ratio of 30 percent. c. Find the sales dollars required to generate a profit of $250,000 for the year assuming a contribution margin ratio of 50 percent.

Solutions

Expert Solution

a. Break even point = Fixed costs / Contribution margin ratio
= $       4,05,000 50%
= $       8,10,000
b. Break even point = Fixed costs / Contribution margin ratio
= $       4,05,000 30%
= $     13,50,000
c. Sales required = Required contribution margin / Contribution margin ratio
= $       6,55,000 / 50%
= $     13,10,000
Working:
Fixed costs $       4,05,000
Add target profit $       2,50,000
Target Contribution margin $       6,55,000

ekkarill92 answered 2 months ago
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