ashboardGo toHelpSearch Harpreet Singh Question 9 Not yet Marked out of 1.00 F F
ID: 1136030 • Letter: A
Question
ashboardGo toHelpSearch Harpreet Singh Question 9 Not yet Marked out of 1.00 F Flag question Revenues (or sales) at Oil Change Co. are the amounts earned from servicing cars. Oil Change Co. charges one flat fee of $24 for performing the oil change service. For $24 the company changes the oil and filter, adds needed fluids, adds air to the tires, and inspects engine belts. Each oil change requires $5.00 of motor oil, a $3 oil filter, $0.70 of other supplies, and a $0.30 disposal fee. What is the contribution rate? Select one: a. 37596 b. 62.596 c There is not enough information to determine the contribution rate. d. $15 O Total variable costs are $58,750 when total sales revenue is $124 396 Find the break-even point in sales dollars if fixed costs are $424.000 Not yetExplanation / Answer
Answer
The correct answer is (b) 62.5%
Per unit price oil change co. charges = $24
Per unit variable expense = cost of oil filter + cost of motor oil + disposal fee + other supplies
= 5 + 3 + 0.7 + 0.3 = 9
Contribution rate = ((sales - variable cost)/sales)*100
= ((24 - 9)/24)*100
= 62.5%
Hence, the correct answer is (b) 62.5%
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