Question

1. If the variable cost % is .60 , find the contribution margin %
2. Fixed costs= 400 , contribution margin %   is .40. Find sales dollars needed to break even.
3. Fixed costs= 500 , contribution margin per unit =10. Find sales in units to earn a net income of 100.
4. Selling price per unit= 80 ; variable costs per unit= 60; fixed costs= 200.

   Find the contrib. margin %.

Answer 1

1. If Vatiable cost % is .60

Contribution margin % = 1 - Variable cost %.

= 1 - .60

= .40

2. Break even sales in dollars

= Fixed Cost / Contribution margin %

= 400/.40

= 1,000

3. Sales in Units

= (Fixed Cost + net Income)/Contribution Margin per unit

= (500 + 100) / 10

= 600/10

= 60 units.

4. Contribution Margin %

= ((Selling price per unit - Variable cost per unit)

÷ (Selling price per unit) )× 100

= (( 80 - 60 ) ÷ 80) × 100

= (20 ÷ 80) × 100

= .25 (or) 25%.