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Question 5 of 7 - / 15 View Policies Current Attempt in Progress In the month of April, Avante Salon gave 2,500 haircuts, shampoos, and permanents at an average price of $40

Accounting Nov 26, 2020

Question 5 of 7 - / 15 View Policies Current Attempt in Progress In the month of April, Avante Salon gave 2,500 haircuts, shampoos, and permanents at an average price of $40. During the month, fixed costs were $20,000 and variable costs were 75% of sales (a) Determine the contribution margin in dollars, per unit, and as a ratio, $ Contribution margin (in dollars) Contribution margin (per unit) Contribution margin (ratio) % e Textbook and Media
Question 5 of 7 > -/15 $ Contribution margin (per unit) Contribution margin (ratio) e Textbook and Media Save for Later Attempts: 0 of 4 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above. (c) The parts of this question must be completed in order. This part will be available when you complete the part above.

Expert Solution

(a)

Contribution margin ratio = 1 - Variable cost ratio

= 1 - 0.75

= 0.25

Contribution margin per unit = Price per unit * Contribution margin ratio

= $40 * 0.25

= $10

Contributionmargin in dollars = 2,500 * $10

= $25,000

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