Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Just sign up for free and you're in → Illustration

Q-21-4T

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 1161

Short Answer

Question: Chaney Company provides lawn care services. Following are data for a recent week:

Service Revenue $1,300

Variable Costs $780

Contribution Margin $520 Chaney provided service to 25 customers during the week. Determine the average amount the company charged each customer, the variable cost per customer, and the contribution margin ratio.

Answer

The average service price is $52, the variable cost per unit is $31.20, and the contribution margin ratio is 40%.

See the step by step solution

Step by Step Solution

Step 1: Calculation of the average amount the company charged each customer

Average service price = Service Revenue/No. of customers

=$1,300/25

=$52

Step 2: Calculation of variable cost per customer

Variable cost per customer = Variable cost/No. of customers

=$780/25

=$31.20

Step 3: Profitability analysis based on contribution margin ratio

Particulars

Amount

Net sales revenue

$1,300

Less: Variable cost

$780

Contribution Margin

$520

Contribution margin ratio (Contribution margin/net sales revenue)

40%

Most popular questions for Business-studies Textbooks

Icon

Want to see more solutions like these?

Sign up for free to discover our expert answers
Get Started - It’s free

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.