Exercise 18-10 In the month of March, Style Salon services 580 clients at an ave

Question

Exercise 18-10 In the month of March, Style Salon services 580 clients at an average price of $140. During the month, fixed costs were dollar 23,520 and variable costs were 65% of sales. Determine the contribution margin in dollars, per unit, and as a ratio. Contribution margin Contribution margin per unit Contribution margin ratio Using the contribution margin technique, compute the break-even point in dollars and in units. Break-even sales Break-even sales Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Exercise 18-10=

(a) Contribution = (580 * $140) * (1 - 0,65) = $28420

Contribution per unit = $28420 / 580 = $49

Contribution in % = (1 - 0,65) % = 35%

(b) Fixed cost = $23520

Break even point in dollar = $23520 / 35%= $67200

Break even point in units = $67200 / $140 = 480 units

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