Question: Isaac Company had revenues of $930,000 last year with total variable costs of $353,400 and fixed costs of $310,000.
Required: 1. What is the variable cost ratio for Isaac? What is the contribution margin ratio?
2. What is the break-even point in sales revenue?
3. What was the margin of safety for Isaac last year?
4. Isaac is considering starting a multimedia advertising campaign that is supposed to increase sales by $7,500 per year. The campaign will cost $5,000. Is the advertising campaign a good idea? Explain.