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Paula's Beauty Salon: Compute Contribution Margin, Break Even and Margin of Safety

In the month of June, Paula's Beauty Salon gave 3400 haircuts, shampoos, and permanents at an average price of $34. During the month, fixed costs were $12716 and variable costs were 83% of sales.

A) Determine the contribution margin in dollars, per unit, and as a ratio.
B) Using the contribution margin technique, compute the break-even point in dollars and in units.
C) Compute the margin of safety in dollars and as a ratio.

Solution Summary

Your tutorial is attached in an Excel file. Click in cells to see computations. One reference is provided.