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Contribution Margin Concepts The following information is taken from the 2017 records of Hendrix's Guitar Center....

Contribution Margin Concepts
The following information is taken from the 2017 records of Hendrix's Guitar Center.

Fixed Variable Total
Sales $1,500,000
Costs
Goods sold 675,000
Labor $320,000 120,000
Supplies 4,000 10,000
Utilities 24,000 26,000
Rent 48,000 0
Advertising 12,000 49,000
Miscellaneous 12,000 20,000
Total costs $420,000 $900,000 (1,320,000)
Net income $ 180,000

Required


(a.) Determine the annual break-even dollar sales volume.

Contribution margin ratio:  Answer


Annual break-even dollar sales volumes: $Answer

(b.) Determine the current margin of safety in dollars.  
$Answer

(c.) Prepare a cost-volume-profit graph for the guitar shop. Label both axes in dollars with maximum values of $1,000,000. Draw a vertical line on the graph for the current ($750,000) sales level, and label total variable costs, total fixed costs, and total profits at $75,000 sales.

(d.) What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by $60,000?
$Answer

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ekkarill92 answered 2 years ago
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