Homework Answers
Answer 1 Contribution margin ration = 45%
Calculated as
Contribution margin ratio = Contribution/Selling price per unit
Contribution per unit = selling price - variable cost per unit
= $500-$275
= $225
Contribution margin ratio = ($225/$500) x 100 = 45%
Answer 2 Breakeven sales in dollars = $288500
Breakeven sales in dollars = Fixed cost/Contribution margin ratio
= $129825/45%
= $288500
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