Answer:
contribution margin ratio= 0.4
Break-even point (dollars)= $635,000
Explanation:
Giving the following information:
Storytime sells tickets at $ 100 per person as a one-day entrance fee.
Variable costs are $ 60 per person, and fixed costs are $254,000 per month.
To calculate the contribution margin ratio, we need to use the following formula:
contribution margin ratio= contribution margin/selling price
contribution margin ratio= (100 - 60)/100
contribution margin ratio= 0.4
To calculate the sales required to break even, we need to use the following formula:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 254,000/0.4
Break-even point (dollars)= $635,000
