Question

BumpyRide Inc. manufactures commercial and residential riding lawnmowers. The company sells one commercial mower per four residential mowers sold. Selling prices for the commercial and residential mowers are, respectively, $700 and $300. The variable selling and production costs are, respectively, $524 and $219. The company’s annual fixed cost is $10,000. If the company’s tax rate is 40% and it wants to earn $3,000 of income after tax next year,

1A)      What are the target sales (in dollars)?

1B)      What is the margin of safety in sales dollars?

please show all work and equations.

Answer 1

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