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Question - Contribution Margin Ratio
The Coffe Club sells specialist coffee drinks from a rented cart on the beachside on the Gold Coast. Provided below is a summarized version of the income statement for July 2015.
Sales $10,000
Cost of beverages $4000
Cost of napkins 1000
Rent of cart 1000
Wages 2000 8000
Profit $2000
The cost of beverages and napkins are classified as variable costs.
Required -
a. Calculate the contribution margin ratio.
b. Calculate the break-even sales in dollars.
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