Contribution margin and breakeven
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The following data pertain to service offered in a fee-for service setting:
Fixed Cost = $9000
Variable Cost = $300
Charge $450
Target profit = $6000
1. Determine the contribution margin for this service
2. Determine the accounting break-even point in terms of volume.
3. Determine the economic break-even point in terms of volume.
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Solution Summary
The solution explains the calculation of contribution margin, accounting break-even and economic break-even point.
Solution Preview
1. Contribution margin = Selling Price - Variable cost = 450 - 300 = $150 per unit
2. ...
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