Clarissa sells her cupcakes for $2.50 each. Clarissa's variable costs per cupcake equal $0.50 and her monthly

Question:

Clarissa sells her cupcakes for $2.50 each. Clarissa's variable costs per cupcake equal $0.50 and her monthly fixed costs are $3,000

Required:

a. What is Clarissa's contribution margin ratio?

b. Using Clarissa's contribution margin ratio, how much revenue does Clarissa need to generate each month to break even?

c. Using Clarissa's contribution margin ratio, how much revenue does Clarissa need to generate each month to earn a monthly profit of $2,000?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...