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E6-7
PDQ Repairs has 200 auto-maintenance service outlets nationwide. It
performs primarily two lines of service: oil changes and brake repair.
Oil change–related services represent 70% of its sales and provide a
contribution margin ratio of 20%. Brake repair represents 30% of its
sales and provides a 40% contribution margin ratio. The company's
fixed costs are $15,600,000 (that is, $78,000 per service outlet).
Instructions
A. Calculate the dollar amount of each type of service that the
company must provide in order
B. The company has a desired net income of $52,000 per service outlet.
What is the dollar amount of each type of service that must be
performed by each service outlet to meet its target net income per
outlet?

E6-12
Dalton Inc. produces and sells three products. Unit data concerning
each product is shown below.
Product
D

E

F

Selling price

$200 $300 $250

Direct labor costs

30

80

35

Other variable costs

95

80

145

The company has 2,000 hours of labor available to build inventory in
anticipation of the company's peak season. Management is trying to