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.