Reference no: EM132847274

Problem - Hot Locks Company developed the following information for its hair dryer sales:

Sales price $60.50 per unit

Variable cost of goods sold $21.50 per unit

Fixed cost of goods sold $130,000

Variable selling expense $1.00

Fixed selling expense $4,000

Fixed administrative expense $6,600

For the year ended December 31, 2020, Hot Locks Company produced and sold 20,000 hair dryers.

Required -

a) Determine the total contribution margin in dollars, contribution margin per unit, and as contribution margin ratio.

b) Calculate the break-even point in units.

b) Briefly explain how the contribution margin differs from gross profit margin.