Use this information (below) to answer questions 15 through 17: SHOW YOUR WORK F

Question

Use this information (below) to answer questions 15 through 17: SHOW YOUR WORK Fixed expenses Rent Salaries Depreciation $ 24,000 $ 40,000 $13,000 Variable expenses Cost of goods sold Supplies Sales commissions 58% of sales 7% of sales 5% of sales 15. What is the company's contribution margin ratio (%)? 16. What is the break-even point in dollars? 17. If the company wants to earn a profit of $20,000 instead of breaking even, what is the amount of sales or revenue dollars the company must achieve?

Explanation / Answer

15 Contribution margin ratio = 1-Varibale expense ratio = 1-(58%+7%+5%)= 30% 16 Break even point = Fixed expenses/Contribution margin ratio = (24000+40000+13000)/30%= 256667 17 Sales dollars= (24000+40000+13000+20000)/30%= 323333 Note: Answers have been rounded off to nearest Dollar

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