COMM 305 Chapter Notes - Chapter 6: Operating Leverage, Income Statement, Contribution Margin

• School: Concordia University
• Department: Commerce
• Course: COMM 305
• Professor: Ibrahim Aly

Document Summary

$ 20,000 (b) ,000 8,000 = contribution margin per unit (c) = 40% contribution margin ratio. Exercise 6-23 (a) (b) (1) contribution margin per room = ( + ) Fixed costs = ,000 + ,000 + ,000 + = ,500. Break-even point in rooms = ,500 = 675 (2) break-even point in dollars = 675 rooms per room. Fixed costs contribution margin ratio = ,500 0. 40. = ,750 per month (1) margin of safety in dollars: Planned activity = 30 rooms per day 30 days. Expected rental revenue = 900 rooms = ,000. Margin of safety in dollars = ,000 ,750 = ,250 (2) margin of safety ratio: ,250 = 25% Operating leverage = ,000 ,000 = 1. 2. Contribution margin ratio = ,000 ,000 = 30% (2) mech-apple: Operating leverage = ,000 ,000 = 2. 6. Contribution margin ratio = ,000 ,000 = 65%