Question

In the month of March, Crane Salon services 590 clients at an average price of $120. During the month, fixed costs were $21,312 and variable costs were 60% of sales. (a) Determine the total contribution margin in dollars, the per unit contribution margin, and the contribution margin ratio. Contribution margin in dollars $ Contribution margin per unit $ Contribution margin ratio %

Answer 1

Answer:

Instructions are below.

Explanation:

Giving the following information:

Sales= 590 units

Selling price= $120

Unitary variable cost= 120*0.6= $72

Fixed costs= $21,312

First, we need to calculate the total contribution margin:

Total contribution margin= 590*(120 - 72)

Total contribution margin= $28,320

Now, the contribution margin per unit:

Unitary contribution margin= 120 - 72= $48

Finally, the contribution margin ratio:

contribution margin ratio= contribution margin / selling price

contribution margin ratio= 48/120

contribution margin ratio= 0.4