Duncan Had Revenues of $900,000 in March

question 24

Essay

Duncan had revenues of $900,000 in March.Fixed costs in March were $480,000 and profit was $60,000.Answer the following questions:
a.What was the contribution margin percentage?
b.What monthly sales volume (in dollars)would be needed to break-even?
c.What was the margin of safety for March?

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Definitions:

Short-Run Average Total Cost (ATC₂)

The total cost divided by the quantity produced in the short-run, where some inputs are fixed.

Diminishing Marginal Returns

A principle stating that if one factor of production is increased while others are kept constant, the resulting increase in output will eventually decline.

Short-Run Average Total Cost (ATC)

The total cost per unit of output in the short run, where some factors of production are fixed.

Profit-Maximizing Level

The output level at which a firm achieves the highest profit, where marginal revenue equals marginal cost.