Accounting Problem: Break-Even in Sales Revenue, Margin of Safety
Sports-Reps, Inc., represents professional athletes and movie and television stars. The agency had revenue of $12,345,000 last year, with total variable costs of $5,678,700 and fixed costs of $2,192,400.
Task:
• What is the contribution margin ratio for Sports-Reps based on last year's data? Round your answer to two decimal places. (Express as a decimal-based amount rather than a whole percent.)
• What is the break-even point in sales revenue?
• What was the margin of safety for Sports-Reps last year?
• One of Sports-Reps's agents proposed that the firm begin cultivating high school sports stars around the nation. This proposal is expected to increase revenue by $230,000 per year, with increased fixed costs of $122,500. Is this proposal a good idea?
The response must include a reference list. One-inch margins, double-space, Using Times New Roman 12 pnt font and APA style of writing and citations.