Exercise 11-10 In the month of March, whispering winds Salon services 560 client

Question

Exercise 11-10 In the month of March, whispering winds Salon services 560 clients at an average price of $100. During the month, fixed costs were $18,360 and variable costs were 64% of sales. Determine the contribution margin in dollars, per unit, and as a ratio Contribution margin Contribution margin per unit Contribution margin ratio LINK TO TEXT LINK TO TEXT VIDEO: APPLIED SKILLS Using the contribution margin technique, compute the break-even point in dollars and in units. Break-even sales Break-even sales units Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT LINK TO TEXT VIDEO: APPLIED SKILLS

Explanation / Answer

1)Sales = 560*100= 56000

Contribution margin In $ =Sales [1-variable cost]

= 56000[1- .64]

= 56000* .36

= 20160

contribution margin = Price [1-variable cost]

= 100 [1-.64]

= $ 36

contribuion margin ratio =Contribution /price

= 36/100

= .36 or 36%

2)Break even sales =fixed cost /CM ratio

= 18360 / .36

= $ 51000

Break even in units =fixed cost/contribution per unit'

= 18360/ 36

= 510 units

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