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What is the contribution margin ratio for 2013

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Reference no: EM131794067

PROBLEM

Sales Revenue Approach

Ace Consulting provides advice to farmers. The operating results for the organisation in 2013 are as follows:

Sales

802,429

Less: Variable costs

030.0001

Contribution margin

372,429

Less: Fixed expenses

(154 750)

Net profit

717 679

Required:

1. What is the contribution margin ratio for 2013?

2. Compute Ace's break-even point for 2013 in dollars.

3. What level of sales dollars must be reached to earn a profit after tax of $420,000? Assume a tax rate of 30%.

4. What issues could be raised about your analysis in part 3 with respect to fixed costs?

Reference no: EM131794067

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