Sports-Reps, Inc., represents professional athletes and movie and television stars. The agency had revenue of $12,400,000 last year, with total variable costs of $6,200,000 and fixed costs of $2,150,000.

Required:

1. What is the contribution margin ratio for Sports-Reps based on last year's data? Round your answer to two decimal places. (Express as a decimal-based amount rather than a whole percent.)

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 $220,000 per year, with increased fixed costs of $108,300. Is this proposal a good idea?

Yes or No

Answer rating: 100% (QA)

1 To find the contribution margin ratio well use the formula Contribution Margin Ratio Revenue Varia... View the full answer