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Metrics 4


Department
Marketing
Course Code
MKT 100
Professor
Paul Finlayson

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Worksheet: Metric 4 Contribution Margin
1)Mohan, an artist, draws caricatures on the waterfront pier. It costs
him approximately $5 in materials (paper and markers) for each
caricature he makes. He sells each caricature for $20. Calculate the
contribution margin in terms of dollars and percent.
Answer:
Contribution Margin ($) = Revenue COGS
= $20 - $5
= $15
Contribution Margin (%) = [Contribution per Unit ($) /
Sale Price per Unit ($)] * 100%
= [(Sale Price per Unit Variable Cost per
Unit) / Sale Price per Unit] *100%
= [($20 - $5) / $20] * 100%
= [$15 / $20] * 100%
= 0.75 * 100%
= 75%
2)The Hotel Grill Bar sells a set lunch for $12. The food cost of sales used
in producing each set lunch is $5. Additional variable costs are $3 per
lunch. The fixed costs of the restaurant are $3 per meal. What is the
contribution margin expressed in dollars and percent?
Variable Expenses = $5 + $3
= $8
Contribution Margin ($) = Revenue Variable Expense
= $12 - $8
= $4
Contribution Margin (%) = [Contribution per Unit ($) /
Sale Price per Unit ($)] * 100%
= [(Sale Price per Unit Variable Cost per
Unit) / Sale Price per Unit] * 100%
= [($12 - $8) / $12] * 100%
= $4 / $12 * 100%
= 0.33 * 100%
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