Question

In: Accounting

In the month of March, Style Salon services 630 clients at an average price of $170....

In the month of March, Style Salon services 630 clients at an average price of $170. During the month, fixed costs were $22,338 and variable costs were 70% of sales.

Determine the contribution margin in dollars, per unit, and as a ratio. (Round answers to 0 decimal places, e.g. 1,225.)
Contribution margin $
Contribution margin per unit $
Contribution margin ratio %
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 sales $
Break-even sales units

Solutions

Expert Solution

Number of Client
$
Price Per Client
$
Total
$
A) Sale 630 170 107100
B) Variable Cost @ 70% of sales 630 119 -74970
C)= (A-B) Contribution = 30% of Sales 630 51 32130
D) Fixed Cost -22338
E ( C-D) Net Benefit 9792
1) Contribution margin = Sales - variable Cost
= $ 107,100 - $ 74,970 = $ 32,130
2) Contribution Margin per unit = Sales - Variable Cost / Number of Client

= $ 107,100 -$ 74,970 / 630

= $119
3) Contribution margin Ratio = Contribution / Sales *100
= $ 32,130 / $ 107,100 * 100
= 30%
4) Break even sales = Fixed Cost / Contribution margin

= $ 22338 / 30%

= $ 74,460
5) Break even sales unit = Break even sales / Sale price per unit

= $ 74,460 / 170

= 438 units

Prove: At 438 Unit of sale Net benfit = 0

Number of Client
$
Price Per Client
$
Total
$
A) Sale 438 170 74460
B) Variable Cost @ 70% of sales 438 119 -52122
C)= (A-B) Contribution = 30% of Sales 438 51 22338
D) Fixed Cost -22338
E ( C-D) Net Benefit 0

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