In the month of March, Trendy Spa services 560 clients at an average price of $1

Question

In the month of March, Trendy Spa services 560 clients at an average price of $100. During the month, fixed costs were $15,260 and variable costs were 65% of sales.

A.) Determine the contribution margin in dollars, per unit, and as a ratio.

Contribution margin $ ___________

Contribution margin per unit $ __________

Contribution margin ratio__________%

B.) Using the contribution margin technique, compute the break-even point in dollars and in units. Break-even sales $ ____________________

Break-even sales____________ units

Explanation / Answer

A.) Determine the contribution margin in dollars, per unit, and as a ratio.
Contribution margin per unit = 100*(1-.65) = $35
Contribution margin ratio = 35/100 = 35%
Contribution margin = 560*.100*.35 = $19,600
Contribution margin $19,600
Contribution margin per unit $35
Contribution margin ratio 35%
B.) Using the contribution margin technique, compute the break-even point in dollars and in units.
15,260/.35 = $43,600
43,600*100 = 436
Break even sales $43,600
Break-even sales 436 units

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.