Homework Answers
Given ,
Selling price per unit = $180
Variable coat per unit = $135
and Fixed costs = $562500
(a) Contribution Margin
= Selling price per unit - variable coat per unit
= $180 - $135
= $45.
(b) Contribution Margin Ratio
= (Contribution margin ÷ selling price per unit)×100
= ($45 ÷ $180) ×100
= 25%.
(c) Break Even point in units
= fixed cost ÷ Contribution margin
= $562500 ÷ $45
= 12500 units.
(d) Break Even point in dollars of sales
= Break even point in units × selling price per unit
= 12500 units × $180
= $2250000.
_____×_____
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