Return to 12 39 PM 87 min. The New Age Pet Store sells Diva Doggle pet waste dis

Question

Return to 12 39 PM 87 min. The New Age Pet Store sells Diva Doggle pet waste disposal and enzyme is $35. The only other costs are fixed costs of $3,000. During the current I systems for $50 each. The systems include the unit and a one-year supply of enzyme digester waste terminator. The cost of the unit Y (a) Your answer is correct. What is the contribution margin per unit? (Round answer to 2 declmal places, e.g. 1.64.) Contribution margin Click if you would like to Show Work for this question: Open Show Work Your answer is correct What is the contribution margin ratio? Contribution margin ratio Open Show Work Click if you would like to Show Work for this question: 71eN10057

Explanation / Answer

Answer:

Given:

Sale price of disposal system per system = $50

Variable cost (cost of unit and enzyme) per system = $35

Fixed cost = $3,000

Answer a:

Contribution margin per system = Sales price - variable cost = $50.00 - $35.00 = $15.00

Answer b:

Contribution margin ratio = (Contribution margin / sales price) * 100 = ($15 / $50) * 100 =30%

Answer c:

Breakeven point in units = Fixed cost / Contribution margin = $3,000 / $15 = 200 units

Breakeven point in dollars = Fixed cost / Contribution margin ratio = $3,000 / 30% = $10,000

(Alternately Breakeven point in dollars = Breakeven point in units * sale price = 200 * $50 =$10,000)

  

Contribution margin $15.00

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