Profitability Analysis Assume Strands, a local hair salon, provides cuts, perms, and hairstyling services. Annual fixed costs...

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Accounting

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

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

Answer & Explanation Solved by verified expert

4.3 Ratings (800 Votes)

a Determine its breakeven point in sales dollars Breakeven point in sales dollars Fixed CostContribution margin ratio Fixed Cost 150000 Contribution margin ratio 1 variable cost of sales Contribution margin ratio 140 Contribution margin See Answer

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