NEED HELP PLEASE Qwik Service has over 200 auto-maintenance service outlets nati

Question

NEED HELP PLEASE

Qwik Service has over 200 auto-maintenance service outlets nationwide. It provides primarily two lines of service: oil changes and break repair. Oil change-related services represent 75% of its sales and provide a contribution margin ratio of 20%. Brake repair represents 25% of its sales and provides a 60% contribution margin ratio. The company's fixed costs are $12,000,000 (that is, $60,000 per service outlet). Calculate the dollar amount of each types of service that the company must provide in order to break even. The company has a desired net income of $45,000 per service outlet. What is the dollar amount of each type of service that must be provided by each service outlet to meet its target net income per outlet?

Explanation / Answer

Qwik Service Details Total Oil change Brake repair Sales % 75% 25% Contribution Margin ratio % 20% 60% Weighted average contibution Margin =0.75*0.20+0.25+0.60= 30.0% Fixed cost total             12,000,000 Break even sales$=Fixed Cost/ Contribution %             40,000,000 Total Oil change Brake repair BEP Sales               40,000,000    30,000,000        10,000,000 If the desired income is 45000 per outlet , required total contribution =12000000+45000*200             21,000,000 Weighted average contribution margin = 30% Required sales $ =21000000/30%=             70,000,000 Total Oil change Brake repair Sales -service wise             70,000,000    52,500,000        17,500,000

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