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sammy [17]
2 years ago
10

Liu Sales has two store locations. Sanford has fixed costs of $154,000 per month and a contribution margin ratio of 30%. Orlando

has fixed costs of $340,000 per month and a contribution margin ratio of 70%. At what sales volume would the two stores have equal profits or losses?
Business
1 answer:
ra1l [238]2 years ago
8 0

Answer:

$465,000

Explanation:

The expressions that describe the profits for the Sanford and Orlando store are, respectively:

P_S=0.3*V-\$154,000\\P_O=0.7*V-\$340,000

Where 'V' is the sales volume. Both stores will experience the same profits or losses when they are equal. The value of 'V' for which the expressions are equal is:

0.3*V-\$154,000=0.7*V-\$340,000\\0.4V=\$186,000\\V=\$465,000

The sales volume at which the two stores have equal profits or losses is $465,000.

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