The Robinson Company sells sports decals that can be personalized with a player’

Question

The Robinson Company sells sports decals that can be personalized with a player’s name, a team name, and a jersey number for $6 each. Robinson buys the decals from a supplier for $1.80 each and spends an additional $0.60 in variable operating costs per decal. The results of last month’s operations are as follows:

Sales revenue $11,400
Cost of goods sold 3,420
Gross profit 7,980
Operating expenses 2,600
Operating income $5,380

Calculate contribution margin per unit? dollars? monthly breakeven point in units?dollars? and contribution margin ratio?

Explanation / Answer

Contribution Margin Per unit=$6-$1.8-$0.6=$3.6

No of units sold=$11,400/$6=1,900

cost of goods sold=$1.8*1,900=$3,420

Variabe operating expenses=$0.6*1,900=$1,140

Fixed operating expense=$2,600-$1,140=$1,460

Break even points(units)=fixed cost/contribution per unit=$1,460/$3.6=405.56=406(units)

Break even points(in $)=fixed cost*S.P/contribution per unit=$1,460*$6/$3.6=$2,433.33

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