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How to solve step by step these questions related to contribution margin? For the Sochi Olympics, Hudson's Bay featured maple leaf mittens. If the variable

How to solve step by step these questions related to contribution margin?

  1. For the Sochi Olympics, Hudson's Bay featured maple leaf mittens. If the variable costs were $5 per pair and it made a 70% margin (because all the proceeds went to support Canadian athletes), what did consumers pay for these mittens to the nearest cent?
  2. Air Canada has launched Rouge, a no frills airline service that mostly flies to vacation destinations. The average per seat cost for the company on a regular Air Canada flight to the Caribbean is $230, but by cutting out some amenities, the cost on Rouge is $175 per seat. If Air Canada wants to make 25% per seat on all its services, what is the selling price to the nearest cent for a customer flying a) on the regular service and b) for a customer flying on Rouge?
  3. Freeman Ltd. Is a manufacturer of office chairs and pays $1500 in rent, $450 in utilities and $340 in insurance per month. It also spends $7 for wood, $26 for leather, and $12 for labour to produce an office chair. If Freeman wants a 32% contribution margin per unit, what should be its selling price per chair?
  4. You are the owner of an exclusive nightclub that is considering holding a New Year's Eve party.You are determined that you need a minimum contribution margin of 40% in order to turn a profit for a single night event at your club. Additionally, in hosting all-you-can-eat and all-you-can-drink events in the past, you know that the food cost is $20 per person and the beverage cost is $17 per person.Finally, the house band charges a fee of $5 per person in attendance. What should you charge for a ticket?

The formulas suggested by my teacher are:

Contribution Margin ($) = Selling price - variable costs

Contribution Margin (%) = Selling price - variable costs/selling price x 100

Thank You!

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1 Maple Leaf Mittens Given Variable costs per pair 5 Margin 70 proceeds support Canadian athletes To find the price consumers pay we need to calculate ... blur-text-image

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