Question

Please how to analysis the below answer. ) CONTRIBUTION MARGIN Formula SALE PRICE PER UNIT - VARIABLE COST PER UNIT , SALE PRICE $ 175 - VARIABLE COST ( i.e fuel Cost ) 100 = $ 75 THUS , CONTRIBUTION MARGIN IS $ 75 OF YEAR 1 NOW CONTRIBUTION MARGIN FOR YEAR TWO IS Here it is written that in year 2 Sale price and variable cost will be increase by 2 % so NEW SALE PRICE IS 175 + 175*2/100 = $ 178.5 NEW VARIABLE COST IS 100 + 100*2/100= $ 102 YEAR 2 CONTRIBUTION WILL BE SALE PRICE PER UNIT - VARIABLE COST PER UNIT =178.5-100 = $ 76.5 2 ) CONTRIBUTION MARGIN RATIO FORMULA TOTAL SALE PER UNIT - VARIABLE COST PER UNIT ------------------------------------------------------------------------------ * 100 TOTAL SALE PER UNIT YEAR 1 CONTRIBUTION MARGIN RATIO = (SALE PER UNIT-VARIABLE COST PER UNIT / SALE PER UNIT )*100 (175-100/175)*100 = 42.85 % YEAR 2 CONTRIBUTION RATION SALE PER UNIT-VARIABLE COST PER UNIT / SALE PER UNIT 178.5-102/178.5*100 = 42.86 % 3 ) BREAK EVEN QUANTITY FIX COST / CONTRIBUTION MARGIN PER UNIT FIX COST WILL BE SAME FOR YEAR 1 AND YEAR 2 FIX COST = LOAN PAYMENT PER MONTH $ 350 + FULL TIME SALARY $ 2500 + BOAT CREW PER FLIGHT $ 30 + DOCK FEE $ 500 -------------------- TOTAL $ 3380 SO 1 YEAR BREAK EVEN UNITS = FIX COST / CONTRIBUTION PER UNITS = 3380 /75 ( $ 75 ( i.e. calculated in point no 1) = 45.06 UNITS SO 2 YEAR BREAK EVEN UNITS = FIX COST / CONTRIBUTION PER UNITS = 3380 /76.5 ( $ 76.5 i.e. calculated in point no 1) = 44.18 UNITS NOW BREAK EVEN SALES'S CALCULATIONS = BREAK EVEN UNITS * SALE PRICE FOR YEAR 1 BREAK EVEN SALE =45.06*175 = $ 7885.50 FOR YEAR 2 BREAK EVEN SALE = 44.18*178.5 = $ 7885.13

Answer 1

In fixed cost data , i am not getting clearly as it is clearly written that "loan payment per month 350" , but only on the basis of this answer conclusion i have assumed 350 as of full year expense. If answer differs then you may multiply 350 by 12 months, because i do not have the clear question image.
Answer contribution mit Margin - sale price per unit - Variable cost per - $175 - 100 (ie. fuel cost) - $75 per unit contribution Margin Ratio - contribution margin sales pêce per mit = 75 X 100 > 42.85'). er uurt xloo 175 Total lixed wost - Loon payment per Mouth full time salary + Boat crew pele flight & Dock fee . 350+2580 +30 +500 -$3380 = fixed cost — a = 3380 contribution per unit → 45.06 or 45 emit's sales price & BEP in units 175 x 45 - $ 7875 units) BEP (in BEPlin $) & -

year2 : Im and year it given that sales price & variable cost in wreased by 21. Hence new price & cost are: sales price a 175 + 115 X 2%. = 178.5 Queimable cost = 100 + 180 x 2% - 102 contribution margen = sales price - variable cost - 178.5 - 102 = 76.5 per unit contribution margin Ratio = sat contribution Margin x 100 sales per unit 42.857 178.5 xloo

Now, the fixed cost of year I will remain same as of the year 1. Hence, REP = tixed cost = 3350 - 44.18 units Contribution per unit 76.5 BEP (in $) = selling price & BEP units = 178.5 x 44.18 - $7886.67