Question

Dot Motion Pictures sells movie tickets for $13 per movie patron. Variable costs are $5.50 per movie patron and fixed costs are $52,000 per month. The company's relevant range extends to 33,000 movie patrons per month. What is Dot's contribution margin per ticket?

Answer 1

Answer: $7.50

Step-by-step explanation:

The Contribution Margin of a good refers to it's SELLING price per unit MINUS it's VARIABLE costs per unit. The term CONTRIBUTION is referring to the portion of sales that is not consumed by variable costs and so CONTRIBUTES to the coverage of Fixed Costs.

So the formula for Contribution margin is,

= Selling Price per unit - Variable Costs

= 13 - 5.50

= 7.50

The Contribution Margin of Dot Motion Picture Tickets are $7.50