Northlake Nordic Centre Inc. sells a skier-day for 30; variable cost is 9 per skier-day. For a season of 20,000 skier-days compute the contribution margin per skier-day, in total, and as a ratio, and the variable-cost ratio (ratios to two decimals).
Northlake Nordic Centre Inc. sells a skier-day for 30; variable cost is 9 per skier-day. For a season of 20,000 skier-days compute the contribution margin per skier-day, in total, and as a ratio, and the variable-cost ratio (ratios to two decimals).
Answer
Contribution margin per skier-day → 21 · Total contribution margin → 420000 · Contribution margin ratio → 0.7 · Variable cost ratio → 0.3
Cells - Contribution margin per skier-day · ±0 - Total contribution margin · ±0 - Contribution margin ratio · ±0.005 - Variable cost ratio · ±0.005 Per unit: 30 − 9 = **21**. Total: 21 × 20,000 = **420,000** (or sales 600,000 − variable 180,000). Ratio: 21 ÷ 30 = 420,000 ÷ 600,000 = **0.70**. Variable-cost ratio: 9 ÷ 30 = **0.30**, and 1 − 0.30 = 0.70 checks. Excel: `=(30-9)/30`.
Hermanson Vol 2 ch 21 (contribution margin and the CM ratio); OpenStax Managerial Accounting §3.1 (concept map I10)