Question 1
The operating budget of the Omega Twelve Company contains the following information.Sales at 92% of capacity | $644 000 |
Fixed costs | $215 000 |
Variable costs | 373 520 | 588 520 |
Net income | $55 480 |
Question 2
Trevor, the new owner of the vehicle accessory shop is considering buying sets of winter tires for $299 per set and selling them at $520 each. Fixed costs related to this operation amount to $3 250 per month. It is expected that 18 sets per month could be sold. How much profit will Trevor make each month?Answer 1
a) | Let x represent the sales volume in dollars. |
b) | Using the contribution margin approach and assuming that P = $1.00, we obtain: |
c) | FC = $203 800 and VC = 0.62, then CM = 1-0.62 = 0.38 |
Answer 2
VC = 299, P = 520, FC = 3 250, then