John Chang is president of Clean Machines, a new car washing service that makes house calls.John has
Question:
Sales revenue $ 60,000
Less all variable 20,000
Less all fixed costs 40,000
Net Income $ 0
Clean Machines performed 500 car washes during the year.
A. How many car washes will Clean Machines need to do in order to earn John's target profit of $40,000?
B. If John thinks that number of car washes is an unrealistic high goal, what else could he do to achieve his target profit?
C. John is considering raising the price of car washes to $130. However, he anticipates that if he raises the price, demand will fall and he will perform 450 car washes. What will his net income be if this occurs? What do you think John should do?
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Related Book For
Auditing and Assurance Services A Systematic Approach
ISBN: 978-1259162343
9th edition
Authors: William Messier, Steven Glover, Douglas Prawitt
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