Winter Wonderland sells hand-knit scarves
Each scarf sells for $50. The company pays $30 to rent a vending space for one day. The variable costs are $10 per scarf. What total revenue amount does the company need to earn to break even? (Round any percentages to two decimal places and your final answer to the nearest cent.)
A) $66.67
B) $37.50
C) $12.50
D) $50.00
B .B) Required sales in dollars = (Fixed costs + Target profit) / Contribution margin ratio
Contribution margin ratio = Contribution margin / Net sales revenue
Unit contribution margin = $50 - $10 = $40 per scarf
Contribution margin ratio = ($40 / $50 ) x 100 = 80.00%
Required sales in dollars = ($30 + $0 ) / 80.00% = $37.50
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