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Tresset [83]
2 years ago
7

Remo Company and Angelo Inc. are separate companies that operate in the same industry. Following are variable costing income sta

tements 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.)
Business
1 answer:
lesya [120]2 years ago
3 0

Answer:

<u>Break-even Sales:</u>

      Remo Company                $128,346.17

      Angelo Inc.                        $201,649.86.

Explanation:

Break-even Sales is the dollar amount of revenue at which there will be neither Profit nor Loss. In other words, it a Point at which Contribution Margin is equal to Fixed Costs. The Formula to Calculate Break-even Sales is:

                         Fixed Cost / Contribution Margin Ratio

where

Contribution Margin Ratio is Sales less Variable Expenses, and expressed as a percentage of Sales.

Remo Company

Contribution Margin Ratio = 75,000 / 275,000 = 27.27%

Break-even Sales = 35,000 / .2727 = $128,346.17

Angelo Inc.

Contribution Margin Ratio = 150,000 / 275,000 = 54.55%

Break-even Sales = 110,000 / .5455 = $201,649.86.

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b. social benefits will be greater than private benefits

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An example of positive externality pertinent to the present is the fact that vaccinating people generates greater positive effects on society, because when vaccinating an individual there is less chance of having more people infected with some disease.

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