value 200 points Artis Sales has two store locations Store A

value: 2.00 points Artis Sales has two store locations. Store A has fixed costs of $160,000 per month and a variable cost ratio of 60%. Store B has fixed costs of $290,000 per month and a variable cost ratio of 35%. At what sales volume would the two stores have equal profits or losses? O Cannot determine with the information given. O $450,000. $473,684 $520,00o

Solution

Variable cost ratio=Variable cost/Sales

Let sales be $x

Hence $(0.4x-160000)= $(0.65x-290000)

x*(0.65-0.4)=(290,000-160000)

x=(290,000-160000)/(0.65-0.4)

which is equal to

=$520,000.

	Store A	Store B
Sales	$x	$x
Less:Variable cost	(x*0.6)=$0.6x	(x*0.35)=$0.35x
Contribution margin	$0.4x	$0.65x
Less:Fixed cost	$160000	$290000
Profit	$(0.4x-160000)	$(0.65x-290000)