Homework Answers
Price = $96 per unit
Variable cost = $48 per unit
Contribution Margin ($96 - $48) = $48 per unit
1) Contribution Margin ratio
Contribution Margin per unit / Selling price per unit = Contribution Margin ratio
$48 / $96 = 0.50
Contribution Margin ratio = 50%
2) Fixed Cost / Contribution Margin ratio = Break even point in dollars
$177,000 / 0.50 = $354,000
Break even point in dollars = $354,000
b) Break even point in units = Fixed cost / Contribution Margin Per unit
Contribution Margin Per unit = Selling price - Variable cost per unit = $161 - $109 = $52
Break even point in units = $275,600 / $52 =
Break even point in units = 5,300 units
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