Homework Answers
Q1.
Contribution Margin per unit = Selling Price - Variable expenses
per unit
= $155 - $90 = $65 per unit
Units sold in 2019 = (Fixed Cost + Net income) / Contribution
Margin per unit
= ($571700 + $273300) / $65 = 13000 units
Units to be sold in 2020 = (Fixed Cost + Desired profit) /
Contribution Margin per unit
= ($571700 + $312300) / $65 = 13600 units
Desired Profit = $273300 + $39000 = $312300
Price
Sales revenue = Desired Profit + Fixed Cost + Variable cost
= $312300 + 571700 + (13000 x $90) = $2054000
Selling price per unit = $2054000 / 13000 = $158 per unit
Q2.
Contribution Margin per unit = $150 - 60% of $150 = $60
Contribution Margin (Dollars) = 550 x $60 = $33000
Contribution Margin ratio = $60 / 150 = 40%
Q3.
Contribution Margin per room = $44 - $7 - $15 = $22 per room
Fixed costs = $5400 + $1000 + $1200 + $1288 = $8888
Break Even Point (units) = $8888 / 22 = 404 rooms
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