# E22-5, Compute contribution margin, break-even point, and margin of safety. In the month of June, Bonita Beauty Salon gave 2,700 haircuts, shampoos,…

E22-5, Compute contribution margin, break-even point, and margin of safety. In the month of June, Bonita Beauty Salon gave 2,700 haircuts, shampoos, and permanents at an average price of $30 During the month, fixed costs were $18,000 and variable costs were 70% of sales. Instructions: (a)(1) Determine the contribution margin in dollars. Total Sales $81,000 Variable Cost 56,700 Contribution margin in dollars $24,300 (a)(2) Determine the contribution margin as a ratio. Contribution margin in dollars Total Haircuts Given Per unit Contribution margin (b)(1) Using the contribution margin technique, compute the breakeven point in dollars. Breakeven sales (in dollars): Amount = Formula Percentage (b)(2) Using the contribution margin technique, compute the breakeven point in units. Breakeven sales (in units): Amount = Formula units Amount (c)(1) Compute the margin of safety in dollars. Margin of safety (in dollars): Amount – Amount = Formula (c)(2) Compute the margin of safety as a ratio. (Rounded to a whole percentage.) Margin of safety (ratio): Amount Ã· Amount = Formula

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