Question

In the month of June, Jose Hebert’s Beauty Salon gave 4,300 haircuts, shampoos, and permanents at an average price of $40. During the month, fixed costs were $16,500 and variable 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			%

eTextbook and Media

  

  

Using the contribution margin technique, compute the break-even point in dollars and in units. (Round answers to 0 decimal places, e.g. 1,225.)

Break-even point		$
Break-even point			units

eTextbook and Media

  

  

Compute the margin of safety in dollars and as a ratio. (Round answers to 0 decimal places, e.g. 1,225.)

Margin of safety		$
Margin of safety ratio			%

Answer 1

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		$4300*10 = 43000
Contribution margin per unit		$40*25% = 10
Contribution margin ratio	100-75	= 25	%

eTextbook and Media

  

  

Using the contribution margin technique, compute the break-even point in dollars and in units. (Round answers to 0 decimal places, e.g. 1,225.)

Break-even point	16500/.25	$66000
Break-even point	66000/40	=1650	units

eTextbook and Media

  

  

Compute the margin of safety in dollars and as a ratio. (Round answers to 0 decimal places, e.g. 1,225.)

Margin of safety	(4300-1650)*40	$106000
Margin of safety ratio	106000/172000	62	%