Calculate Contribution Margin

This weeks assignment is broken down into three sections – a breakeven calculation, a multiple choice question and an essay. Your essay should be at least two pages in length, 12 point font, double spaced.

Please complete question 1-6 below.  Please show all of your work to receive credit.

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Breakeven Analysis:

Brandon’s home health care agency is considering a new product with a fixed cost of $2,000, a charge per unit of $150, and a variable cost of $100.

1. Calculate the break-even point in quantity.

2. Calculate the contribution margin in dollars.

3. Calculate the contribution margin as a percent.

4. Calculate the breakeven point in dollars.


5. The breakeven point occurs where:


total   variable costs and total revenue intersect


total   revenue outpaces total avoidable fixed costs


total   costs and total revenue intersect


total   fixed costs and total revenue intersect


total   profit margin and total costs intersect


6. Define cost behavior. Identify and explain the five general types of cost behavior.


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