Diego Motors is a small car dealership. On average, it sells a car for
$25,000, which it purchases from the manufacturer for $22,000. Each month, Diego Motors pays $50,000 in
rent and utilities and $60,000 for salespeople’s salaries. In addition to their salaries, salespeople are paid a
commission of $500 for each car they sell. Diego Motors also spends $10,000 each month for local advertisements.
Its tax rate is 40%.
1. How many cars must Diego Motors sell each month to break even?
2. Diego Motors has a target monthly net income of $54,000. What is its target monthly operating income?
How many cars must be sold each month to reach the target monthly net income of $54,000?
2007-11-01
12:10:50
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1 answers
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asked by
Anonymous