How large can fixed costs be for the wholesaling operation, Ask an Expert

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Mary Clark, a recent graduate of Clarion South University, is planning to open a new wholesale operation. Her target operating profit margin is 26 percent. Her unit contribution margin will be 50 percent of sales. Average annual sales are forecast to be $3,250,000.

A) How large can fixed costs be for the wholesaling operation and still allow the 26 percent operating profit margin to be achieved?

B) What is the break-even point in dollars for the firm?

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