Funtime Park competes with Slide World by providing a variety of rides. Funtime sells tickets at $ 85 per person as a one-day entrance fee. Variable costs are $ 17 per person, and fixed costs are $ 428,400 per month. Compute Funtime Park's contribution margin ratio. Carry your computation to two decimal places. Use the contribution margin ratio approach to determine the sales revenue Funtime Park needs to break even.

Perform a numerical proof to compute the contribution margin per unit.

$531,000

Explanation:

For determining the contribution margin ratio, first we have the contribution margin per unit which is shown below:

Contribution margin per unit = Selling price per unit - Variable expense per unit

= $85 - $17

= $68

And, Contribution margin ratio = (Contribution margin per unit) ÷ (selling price per unit) × 100  

So, the Contribution margin ratio is

= ($68) ÷ (85) × 100

= 80%

Now the break even point in sales dollars is

= $428,400 ÷ 80%

= $531,000

We simply applied the formulas

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