Compute the margin of safety

Question

In the month of June, Bonita's Beauty Salon gave 3,460 haircuts, shampoos, and permanents at an average price of $50. During the month, fixed costs were $17,900 and variable costs were 60% of sales.

1. Determine the contribution margin in dollars, per unit, and as a ratio.
2. Contribution margin (in dollars) $
3. Contribution margin per unit $
4. Contribution margin ratio %

Using the contribution margin technique, compute the break-even point in dollars and in units.

• Break-even point (in dollars) $
• Break-even point (in units) units

Compute the margin of safety in dollars and as a ratio.

• Margin of safety (in dollars) $
• Margin of safety (ratio) %