Remo Company and Angelo Inc. are separate companies that operate in the same ind
ID: 2516101 • Letter: R
Question
Remo Company and Angelo Inc. are separate companies that operate in the same industry. Following are variable costing income statements for the two companies showing their different cost structures: Remo Co. Angelo Inc. Sales revenue $ 275,000 $ 275,000 Less: Variable cost 200,000 125,000 Contribution margin $ 75,000 $ 150,000 Less: Fixed cost 35,000 110,000 Net operating income $ 40,000 $ 40,000 Required: Calculate the break-even sales revenue for each company. (Round your "Contribution Margin Ratio" percentage to 2 decimal places (i.e. .1524 = 15.24%) and final answers to 2 decimal places.)
Explanation / Answer
break-even sales revenue = Fixed Cost / Contribution Margin Ratio
Contribution Margin Ratio = Sales Revenue / Contribution Margin *100
Hence the correct answer is :
Remo Co = $ 128,333.33
Angelo Inc = $ 201,666.67
Remo Co. Angelo Inc. Contribution margin 75,000 150000 Sales revenue 275000 275000 Contribution margin Ratio 27.27 54.55 Fixed cost 35,000 110000 break-even sales revenue 1,28,333.33 2,01,666.67