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# Contribution margin and Break even point

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Perrson Company makes two types of backpacks. Data for the company's activity during a typical month are presented below:

School Hiker
Model Model
Sales units 40,000 40,000
Selling price per unit \$6 \$18
Variable expense per unit \$2 \$10

The company's total fixed expenses are \$80,000. There are no beginning or ending inventories.

Required:

a. What is the per unit contribution margin for each of the two models?

b. What is the break-even point in terms of sales dollars if the sales mix remains constant?

#### Solution Preview

Perrson Company makes two types of backpacks. Data for the company's activity during a typical month are presented below:
Required:

a. What is the per unit contribution margin for each of ...

#### Solution Summary

This solution provides all of the steps to compute the contribution margin and break even point

\$2.19