Question

PDQ Repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil change–related services represent 80% of its sales and provide a contribution margin ratio of 25%. Brake repair represents 20% of its sales and provides a 35% contribution margin ratio. The company’s fixed costs are $15,611,400 (that is, $78,057 per service outlet).

Calculate the dollar amount of each type of service that the company must provide in order to break even. (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.25 and round final answers to 0 decimal places, e.g. 2,510.)

Oil changes		$Enter a dollar amount
Brake repair		$Enter a dollar amount

The company has a desired net income of $50,976 per service outlet. What is the dollar amount of each type of service that must be performed by each service outlet to meet its target net income per outlet? (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.25 and round final answers to 0 decimal places, e.g. 2,510.)

Oil changes		$Enter a dollar amount
Brake repair		$Enter a dollar amount

Answer 1

Solution: