Profitability Analysis
Assume Strands, a local hair salon, provides cuts, perms, andhairstyling services. Annual fixed costs are $150,000, and variablecosts are 40 percent of sales revenue. Last year's revenues totaled$300,000.
(a) Determine its break-even point in sales dollars.
$Answer 375,000 wrong
(b) Determine last year's margin of safety in sales dollars.
$Answer 75,000 wrong
(c) Determine the sales volume required for an annual profit of$80,000.
Round your answer to the nearest dollar.
$Answer 316,667 wrong
Multiple Product Planning with Taxes
In the year 2017, Pyramid Consulting had the following contributionincome statement:
PYRAMID CONSULTING
Contribution Income Statement
For the Year 2017 |
|---|
| Sales revenue | | $ 1,300,000 |
| Variable costs | | |
| Cost of services | $ 420,000 | |
| Selling and administrative | 200,000 | (620,000) |
| Contribution margin | | 680,000 |
| Fixed Costs -selling and administrative | | (285,000) |
| Before-tax profit | | 395,000 |
| Income taxes (36%) | | (142,200) |
| After-tax profit | | $ 252,800 |
D) What is the break-even point in sales revenue if managementmakes a decision that increases fixed costs by $57,000?
Use rounded contribution margin ratio (2 decimal places) foryour calculation.
$ 657,692 wrong
