Chapter 21, Problem S21.10SE

To determine

Contribution Margin:

Contribution Margin is the amount of sales after adjusting variable costs. Contribution Margin is calculated with the help of following formulas:

$\text{Contribution Margin per unit = Sales price – Variable cost per unit}$

Breakeven Point:

The Breakeven point is the level of sales at which the net profit is nil. It can be explained as a situation where the business is generating a sale that is equal to the expenses incurred and hence no profits no loss. Breakeven point in units is calculated with the help of following formula:

$\text{Breakeven point }\left(\text{units}\right)\text{ = }\frac{\text{Total Fixed Costs}}{\text{Contribution Margin Per Unit}}$

1. Contribution Margin Per unit

To Determine:

The Contribution Margin per unit for Funday park

To determine

2. Breakeven sales units:

To Determine:

Breakeven point in units for Funday Park

To determine

3. Numerical Proof:

To perform:

A numerical proof for the breakeven point in units for Funday Park