Answer:
Contribution margin= $41,250
Contribution margin per unit= $10
Contribution margin ratio= 0.25 or 25%
Breakeven Point ($)=$66,000
Breakeven Point (units)=1,650 units
Explanation:
Contribution margins = sales price - variable costs
The sales price is $40 per unit.
variable costs per units will be total variable cost / total units
total variable costs will be 75% of sales
= 4,125 x $40
=$165,000
variable cost will be 75/100 x 165,000
=0.75 x 165,000
=$123,750
variable cost per item is $123, 750 / 4125
variable cost per unit is $30
(Total)Contribution margin is sales - variable costs
=$165,000 - $123,750
=$41,250
Contribution margin per unit will be $40- $30
Contribution margin per unit is $10
Contribution margin ration =<u>total revenue - variable costs</u>
total revenue
= <u>$165,000 - $123,750</u>
$165,000
=41,240/ 165,000
=0.25
=As a percentage, contribution margin ratio = 25%
Break-even point using contribution margin technique
Break-even in units = fixed cost/ contribution margin per unit
= $16,500/ 10
=1650 units
Break-even in dollars= Breakeven units x selling price
=1650 x 40
=$66,000
