In the month of March, Blossom Salon services 550 clients at an average price of $100. During the month, fixed costs were $17,520 and variable costs were 60% of sales.
Determine the total contribution margin in dollars, the per unit
contribution margin, and the contribution margin ratio.
Contribution margin in dollars |
$ |
||
Contribution margin per unit |
$ |
||
Contribution margin ratio | % |
Using the contribution margin technique, compute the break-even
point in dollars and in units.
Break-even sales |
$ |
||
Break-even sales | units |
Answer | |
Contribution margin in dollars (WN-1) | $ 22,000 |
Contribution margin per unit (WN-2) | $ 40 Per units |
Contribution margin ratio% ( WN-3) | 40% |
Break-even sales ( WN-4) |
$ 43,800 |
Break-even sales Units (WN-5) | $ 438 Unit |
Working Note | |
WN- 1 | Contribution Margin = Contribution Margin Per Unit * Total Sales Volume |
$40*550 = $22,000 | |
WN-2 |
Contribution Margin Per Unit= Selling Price Per Unit - Variable Cost Per Unit |
100 -( 0.60*100) = $40 per Units | |
WN-3 | Contribution Margin Ratio = Contribution Margin / Sales *100 |
40/100*100 = 40% | |
WN-4 | Break Even Sales (in Dollars) = Fixed Cost / Contribution Margin Ratio |
17520/40%=$43,800 | |
Wn-5 | Break Even Sales (in Units) = Fixed Cost / Contribution Margin Per Unit |
17520/40= 438 Units |
In the month of March, Blossom Salon services 550 clients at an average price of $100....
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