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    Contribution Margin & Margin of Safety

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    In the month of June, Paula's Beauty Salon gave 4,000 haircuts, shampoos, and permanents at an average price of $37. During the month, fixed costs were $21,312 and variable costs were 76% of sales.

    Determine the contribution margin in dollars, per unit, and as a ratio. (Round contribution margin per unit to 2 decimal places, e.g. 10.50, and the other answers to 0 decimal places, e.g. 125.)
    Contribution margin in dollars $
    Contribution margin per unit $
    Contribution margin ratio %

    Using the contribution margin technique, compute the break-even point in dollars and in units. (Round answers to 0 decimal places, e.g. 125.)
    Break-even point in dollars
    Break-even point in units

    Compute the margin of safety in dollars and as a ratio. (Round answers to 0 decimal places, e.g. 125.)
    Margin of safety in dollars $
    Margin of safety ratio %

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    Solution Preview

    In the month of June, Paula's Beauty Salon gave 4,000 haircuts, shampoos, and permanents at an average price of $37. During the month, fixed costs were ...

    Solution Summary

    The solution computes Contribution margin in dollars, Contribution margin per unit, Contribution margin ratio, Break-even point in dollars, Break-even point in units, Margin of safety in dollars, Margin of safety ratio.

    $2.19