Final answer:
The sales revenue of Stenback Dry Cleaners is $320,000 and the operating income is $247,500. The contribution margin ratio is 10%.
Step-by-step explanation:
To determine the sales revenue and operating income of Stenback Dry Cleaners, we need to first calculate the contribution margin ratio. The contribution margin ratio is the ratio of contribution margin to sales revenue. The contribution margin is the difference between sales revenue and variable expenses. In this case, the total variable expenses are $45,000. With the sales revenue needed to break even at $50,000, we can calculate the contribution margin ratio as follows:
Contribution margin ratio = (sales revenue - variable expenses) / sales revenue
= ($50,000 - $45,000) / $50,000
= $5,000 / $50,000
= 0.1
Therefore, the contribution margin ratio is 0.1 or 10%.
To find the sales revenue, we can use the contribution margin ratio with the total fixed expenses:
Sales revenue = (total fixed expenses / contribution margin ratio) + total variable expenses
= ($27,500 / 0.1) + $45,000
= $275,000 + $45,000
= $320,000
Therefore, the company's current sales revenue is $320,000.
To find the operating income, we can subtract the total fixed expenses and variable expenses from the sales revenue:
Operating income = sales revenue - total fixed expenses - total variable expenses
= $320,000 - $27,500 - $45,000
= $247,500
Therefore, the company's current operating income is $247,500.