Assume a local Cost Cutters provides cuts, perms, and hairstyling services. Annual fixed costs are $120K, & variable costs are 40% of sales revenue. Last year's revenues totaled $250K.
BEP = $200,000
Last year's margin of safety in sales dollars = $50K
BEP = $200,000 when fixed cost is absorbed by the contribution
Profit = $80K
Sales Revenue = 200K+80K = 280K
Sales Volume must be $280,000
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