Problem
Aeveen Company had revenues of $930,000 last year with total variable costs of $399,900 and ?xed costs of $307,800.
Task
A. What is the variable cost ratio for Aeveen? What is the contribution margin ratio?
B. What is the break-even point in sales revenue?
C. What was the margin of safety for Aeveen last year?
D. Aeveen is considering starting a multimedia advertising campaign that is sup- posed to increase sales by $7,500 per year. The campaign will cost $5,000. Is the advertising campaign a good idea? Explain.