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
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
In the month of June, Al Jamil Beauty Salon gave 5,400 haircuts, shampoos, and permanents at an average price of $ 30. During the month, fixed costs were $ 36,000 and variable costs were 70% of sales.
Instructions
(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
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