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What amount of revenue would nippon earn from tax services

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Reference no: EM132523830

Nippon Company provides primarily two lines of service: accounting and tax. Accounting-related services represent 60% of its revenue and provide a contribution margin ratio of 30%. Tax services represent 40% of its revenue and provide a 45% contribution margin ratio. The company's fixed costs are $9,000,000.

Instructions

Question 1: Calculate the revenue in total and then from each type of service that the company must achieve to break even.

Question 2: The company has a desired net income of $1,800,000. What amount of revenue would Nippon earn from tax services if it achieves this goal with the current sales mix?

Question 3: Calculate the company's degree of operating leverage, assuming the desired net income of $1,800,000 and expected contribution margin are achieved.

Reference no: EM132523830

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