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Question

Dooument1-Word lings Renew View ACROBAT Ten me what you warn to do Stong ote I am going to open my own Sports Jersey store. I will be selling Sports Jerseys for $99 each My variable costs are $34 1. What is my Contribution Margin per Unit? 2, what is the Contribution Margin Ratio (%)? 3. If I sell 1,000 Jerseys in my first month of business, what is my Contribution Margin in dollars? 4. If my total fixed costs for the month are $25,000. What is my profit for the month if sell 1,000 jerseys? 5. If my fixed costs for the month are $25,000 what is my Break Even Point in Units? 6. If I wanted to make $100,000 each month, how many units will need to sell each month? 8

Explanation / Answer

Sports Jerseys Contribution Margin Per Unit=(Selling Price Per Unit-Variable Cost Per Unit) Selling Price=(A) $    99.00 Variable Cost=(B) $    34.00 Contribution Margin(C )=(A)-(B) $    65.00 1) Contribution Margin Per Unit= $    65.00 2) Contribution Margin Ratio=(Contribution Margin Per Unit/Selling Price Per Unit) Contribution Margin Per Unit=(A) $    65.00 Selling Price Per Unit=(B) $    99.00 Contribution Margin Ratio=((A)/(B))*100 65.66% 3) Selling Units 1000 Contribution Margin(Dollars)=(1000*$65) 65000 4) Selling Price(1000*$99)=(A) 99000 Variable Cost(1000*$34)=(B) 34000 Contribution Margin(1000*$65)=(C )=(A)=(B) 65000 Less: Fixed Cost=(D) 25000 Profit=(E )=(C )-(D) 40000 5) Breakeven (Units)=Fixed Cost/Contribution Margin Per Unit Fixed Cost=(A) 25000 Contribution Margin Per Unit=(B) 65 Breakeven (Units)=(A)/(B) 384.62

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