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In the month of June, New Day Spa served 500 clients at an average price of...

In the month of June, New Day Spa served 500 clients at an average price of $150. During the month, fixed costs were $25,200 and variable costs were 60% of sales.What is the Break-even point clients

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Answer #1

The Break-even point of client is calculated below:

Break-even point = Fixed Cost / Contribution Margin Ratio

Contribution Margin Ratio = (Sales Revenue - Variable Cost) / Sales Revenue *100

Given that :

Sales Revenue = 500 * $150 = $75,000

Variable Cost (60% of sales) =  $75,000 * 60% = $45,000

Contribution Margin Ratio = ($75,000 - $45,000)/ $75,000 *100

= $30,000/$75,000 *100

= 40%

Break-even point = Fixed Cost / Contribution Margin Ratio

=  $25,200   / 40%

= $63,000

Break-even point = $63,000   

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