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The three questions use this case: This month, Candel Gym has sales of $800,000, contribution...

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Accounting

The three questions use this case: This month, Candel Gym has sales of $800,000, contribution margin of $320,000, fixed cost of $200,000 and operating profit of $120,000.

Q1. What is the breakeven RATIO? ________? The Break-even Sales? $__________________. Use What-If 3-Trials method. Manually sketch your 3 trials in the space provided.

Q2. What is the firms Operating Risk Ratio? ____________. Margin of safety ratio to sales [ie., safety ratio]? _____ %

Q3. What is the firms operating leverage number? _________ times

Q4. BM Company sells two products, A and B. Product A sells for $15 per unit with variable costs of $10 per unit. Product B sells for $40 per unit with variable costs of $25 per unit. The ratio of total contribution margin to total sales dollars is 35%. Total fixed cost for this period is $140,000. BM Company typically sells four (4) Product As for every Product B [= Sales mix ratios are 80% for A, and 20% for B].

a. What is the breakeven point in combined total sales revenue dollars? $_____________

b. Determine the breakeven point in numbers of A and B. Ans: ________ units of A; _________units of B.

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