Solution-Calculate contribution margin for each pet house

Calculate contribution margin for each pet house

Reference no: EM13546335

Pete's Pet Products is a sole proprietorship owned by Pete Thompson. The store provides a full-line of pet products, including food, grooming materials, toys, leashes, etc. The company also sells hand-made pet houses, including dog houses, bird cages, and cat castles. Each of the pet houses is being evaluated in terms of cost-volume-profit. See the relevant information below:

	Dog house	Bird cage	Cat castle
Sales Price	$140	$95	$160
Variable cost	$65	$34	$56
Fixed monthly cost	30%	25%	45%

When Pete uses a distributor to sell additional pet houses, he has to pay a sales commission of 8% of the sales price. On average, he sells 60% of each pet house through distributors. The fixed costs (shown above) are based on estimated design time for each product. Pete's store averages $32,000 of fixed costs per month.

Calculate the contribution margin for each pet house. Ignore the sales commission for this computation.
Calculate the monthly break-even units for each pet house. Ignore the sales commission for this computation.

Reference no: EM13546335

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Calculate contribution margin for each pet house

Reference no: EM13546335

Reference no: EM13546335

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