Question: Fashion Headwear Ltd operates a chain of exclusive ski hat

Fashion Headwear, Ltd. operates a chain of exclusive ski hat boutiques in the western United States. The stores purchase several hat styles from a single distributor at $18 each. All other costs incurred by the company are fixed. Fashion Headwear, Ltd. sells the hats for $30 each.

Required
a. If fixed costs total $150,000 per year, what is the breakeven point in units? In sales dollars?
b. What is Fashion Headwear's contribution margin ratio? Its variable cost ratio?
c. Assume that Fashion Headwear, Ltd. currently operates at a loss. What actions could managers take to lower the breakeven point and begin earning a profit?




Sale on SolutionInn
Sales3
Views360
Comments
  • CreatedFebruary 21, 2014
  • Files Included
Post your question
5000