Sports-Reps, Inc., represents professional athletes and movie and television stars. The agency had revenue of $12,345,000 last

Question:

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.
Required:
1. What is the ratio for Sports-Reps based on last year’s data? What is the break-even point in sales revenue?
2. What was the margin of safety for Sports-Reps last year?
3. 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? Explain.
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...