E6-2

In the month of June, Jose Heberts Beauty Salon gave 4,000 haircuts, shampoos,

and permanents at an average price of $30. During the month, fi xed costs were $16,800

and variable costs were 75% of sales.

Instructions

(a) Determine the contribution margin in dollars, per unit and as a ratio.

(b) Using the contribution margin technique, compute the break-even point in dollars and

in units.

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