Fidelity Multimedia sells audio and video equipment and car stereo products. After performing a study of fixed and variable costs in the prior year, the company prepared a product line profit statement as follows:
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Required:
a. Calculate the contribution margin ratios for the audio, video, and car product lines.
b. What would be the effect on profit of a $125,000 increase in sales of audio equipment compared with a $125,000 increase in sales of video equipment or a $125,000 increase in sales of car equipment? Based on this limited information, which product line would you recommend expanding?
c. Calculate the break even level of sales dollars for the company as a whole. (Round to the nearest dollar.)
d. Calculate sales needed to achieve a profit of $1,800,000, assuming the current mix. (Round to the nearest dollar.)
e. Determine the sales of audio, video, and car products in the total sales amount calculated for part d. (Round to the nearest dollar.)