viva sells its waterproof phone case for $94 per unit. fixed costs total $172,000, and variable costs are…

viva sells its waterproof phone case for $94 per unit. fixed costs total $172,000, and variable costs are $28 per unit. (1) determine the contribution margin ratio. (2) determine the break - even point in dollars.

viva sells its waterproof phone case for $94 per unit. fixed costs total $172,000, and variable costs are $28 per unit. (1) determine the contribution margin ratio. (2) determine the break - even point in dollars.

Answer

Explanation:

Step1: Calculate contribution margin per unit

Contribution margin per unit = Selling price per unit - Variable cost per unit. So, $94 - 28=$66$ per unit.

Step2: Calculate contribution margin ratio

Contribution margin ratio = $\frac{\text{Contribution margin per unit}}{\text{Selling price per unit}}$. Substituting values, we get $\frac{66}{94}\approx 0.7021$ or $70.21%$.

Step3: Calculate break - even point in dollars

Break - even point in dollars = $\frac{\text{Fixed costs}}{\text{Contribution margin ratio}}$. Given fixed costs = $$172000$ and contribution margin ratio = $0.7021$, we have $\frac{172000}{0.7021}\approx$244980.77$.

Answer:

(1) Contribution margin ratio: Numerator: $66$ / Denominator: $94$ = $0.7021$ (or $70.21%$) (2) Break - even point in dollars: Numerator: $172000$ / Denominator: $0.7021$ = $$244980.77$