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1. Price per vist =$85 Variable Cost per vist =? Number of visits =3000 Contribu

ID: 2667103 • Letter: 1

Question

1. Price per vist =$85
Variable Cost per vist =?
Number of visits =3000
Contribution Margin = $180,000
Fixed costs =?
Ne income = $80,000

2.Price per visit = $70
Variable cost per visit = $20
Number of visits =?
Contribution Margin = $130,000
Fixed Costs = $90,000
Net Income = ?

3. Price per visit = ?
Variable Cost per visit = $35
Number of visits = 3250
Contribution Margin = ?
Fixed costs = $78,000
Net Income = $117,000

4. Price per visit = $65
Variable cost per visit = $40
Number of visists = 2000
Contribution Margin = ?
Fixed Costs = $60,000
Net Income = ?

Thank you
what i also need to know is how and when do I know when to subtract and when to add, this is confusing.

Explanation / Answer

1.

            Sales    = variable costs + Fixed costs + Net income

Here (Sales-variable costs is contribution)

            Contribution = Fixed cost + Net income

            Fixed costs      = Contribution – Net income

                                    =$180,000 - $80,000

                                    =$100,000

           

Sales                = Price pre visit * No of Visits

                        =$85*30000

                        = $255,000

Sales – Variable cost = Fixed costs + Net income

Variable costs = Sales – Fixed costs – Net income

                        =$225,000 - $100, 000 - $80,000

                        =$45,000

2.

            Contribution = Fixed costs + Net income

            Net income      =$180,000 - $90,000

                                    =$90,000

            Sales – Variable costs = Fixed costs + Net income

(No of visits*Price pre visit) – (Variable costs per visit*No of visit)

=Fixed costs +Net income

(X*$85) – ($20*X)     = $90,000 +90,000

X*$65                         =$180,000

            X                     =$180,000/65

                                    =2769

Therefore no of visits =2769

3.

                        Contribution = Fixed costs + Net income

                                              =$78,000+ $117,000

                                                =$195,000

(No of visits*Price pre visit) – (Variable costs per visit*No of visit)

=Fixed costs +Net income

(3250*X) – ($35*X)   =$195,000

            3215*X           =$195,000

                        X         =$95,000/3215

                                    =$29.5

Therefore price per visit is $29.5

4.

                        Sales – Variable costs = Fixed costs + Net income

                        $65*2000 - $40*2000 =$60,000 +Net income

                                    Net income = $60,000- $50,000

                                                        =$10,000

            Contribution    = $60,000+$10,000    

                                    $70,000