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# contribution margin, contribution margin ratio break-even units and break-even dollars

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** Please see the attached file for an Excel formatted copy of the problem description **

Calculate contribution margin, contribution margin ratio break-even units and break-even dollars, and answer the following:

Decision Guideline Phonetronix (CVP) Analysis 3-Jul-11

Proposal A Proposal B Proposal C
Selling Price \$99 \$129 \$99
Variable Cost \$55 \$55 \$49
Contribution Margin
Contribution Margin Ratio

Fixed Cost \$110,000 \$110,000 \$110,000

Break-Even In Units

Break-Even In Dollars

1. What are the break-even points in units and dollars under proposal A?

2. How did the increased selling price under proposal B impact the break-even points in units and dollars compared to the break-even points calculated under proposal A?

3. Why did the change in variable cost under proposal C not impact the break-even points in units and dollars as significantly as proposal B did?

#### Solution Preview

Please see the attached excel file.

Decision Guideline Phonetronix (CVP) Analysis 3-Jul-11

Proposal A Proposal B Proposal C
Selling Price \$99 \$129 \$99
Variable Cost \$55 \$55 \$49
Contribution Margin \$44 \$74 \$50
...

#### Solution Summary

This solution carefully assesses contribution margin, contribution margin ratio break-even units, and break-even dollars in the given problem.

\$2.49