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Safari File Edit View History Bookmarks Window Help a edugen.wileyplus.com Basic Financial Calculator Download rb...nts- RARBG Facebook WileyPLUS WileyPLUS Exercise 19-7 Exercise 19-7 e outlets nationwide. It performs primarily two lines of PDQ Repairs has 200 auto-maintenance servic 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 a 30% contribution margin ratio. The company's fixed costs are $15,650,000 (that is, $78,250 per service outlet) % of its sales and provides Calculate the dollar amount of each type of service that the company must provide in order to break even. (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. o.25 and round final answers to O decimal places, e.g. 2,510.) Oil changes $ Brake repair The company has a desired net income of $54,000 per service outlet. What is the dollar amount of eac uformod hic each service outlet to meet its target net income per outlet

Explanation / Answer

Oil Change Brake repair Total Sales Mix % 70% 30% 100% Contribution margin ratio 20% 30% Weighted CM ratio 14% 9% 23% Total Fixed coost: $ 15650,000 Break even in $: Total fixed cost / Weighted CM ratio 15650,000 /23% = $68043,478 Sales at Break even: Oil change (68043,478 *70%): 47630434.6 Brake repair (68043478*30%): 20413043.4 Req 2: Desired profit per outlet: $ 54000 Fixed cost per ouotlet: $ 78250 Desired contribution per outlet: 54000+78250 = $ 132,250 Target sales in $ = Desired contribution/ Wweighted Cm ratio 132250 /23% = $ 575,000 Sales to e earn target income: Oil change: (575000*70%) 402500 Brake repair (575000*30%): 172500

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