# Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of $22 each

## Question:

Required:

1. What is the contribution margin per unit? What is the contribution margin ratio?

2. Calculate the sales revenue needed to break even.

3. Calculate the sales revenue needed to achieve a target profit of $245,000.

4. What if the average price per unit increased to $23.50? Recalculate:

a. contribution margin per unit

b. contribution margin ratio (rounded to four decimal places)

c. Sales revenue needed to break even

d. Sales revenue needed to achieve a target profit of $245,000

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...

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