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Sagot :
Answer:
Selling price = $10.50
Variable cost = $6.30
Fixed cost = $10,500
Contribution margin = Selling price - Variable cost = $10.50 - $6.30 = $4.20
Contribution margin ratio = Contribution margin/Selling price = $4.20/$10.50 = 0.4 = 40%
1. Break even sales = Fixed cost / Contribution margin ratio
Break even sales = $10,500 / 40%
Break even sales = $10,500 / 0.40
Break even sales = $26,250
2. Break even sales = (Fixed cost + Operating income) / Contribution margin ratio
Break even sales = ($10,500 + $13,500) / 40%
Break even sales = $24,000 / 0.40
Break even sales = $60,000
Lo believes most locations could generate $63,000 in monthly sales.
Observation: The monthly sales is greater than the breakeven, so the monthly sales is the best choice.
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