In the month ofJune, Jose Hebert\'s Beauty Salon gave 3,800 haircuts, shampoos,

Question

In the month ofJune, Jose Hebert's Beauty Salon gave 3,800 haircuts, shampoos, and permanents at an average price of $40 During the month fixed costs were s 16,500 and vanable costs were 75% of sales. Determine the contribution margin in dollars, per unit and as a ratio. (Round contribution margin per unit and contribution margin ratio to 2 decimal places, e.g. 5.25&10.50.) Contribution margin Contribution margin per unit Contribution margin ratio VIDEO: SIMILAR EXERCISE Using the contribution margin technique, compute the break-even point in dollars and in units. (Round answers to O decimal places, e.g. 1,225.) Break-even point Break-even point units VIDEO: SIMILAR EXERCISE

Explanation / Answer

1.

2.

break even point in dollars = fixed costs / contribution margin ratio

break even point in units = fixed costs / contribution per unit

3.margin of safety in dollars = total dollar sales - break even sales

margin of safety ratio = (margin of safety in dollars / sales ) *100

Contribution margin (sale price - variable costs) => ($40 * 3800 hair cuts) - (variable costs) => ($152,000 - 75%*152,000) =>($152,000 - $114,000) $38,000 Contribution margin ($40 - 75%*$40) =>($40 - $30)=>$10 $10 Contribution margin ratio (1 - variable cost ratio) =>(1 - 0.75) 25%

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