Mike is considering for the part time painters he would operate as an independent painter but the kobs would be given to him by the company in the company advertisements $120 would be charged for each room painted the painter would then get 80% of the amount bulled for each job the painter would supply paint and brushes at a vost pf $40 each painter must have his or her own ladder drop clothes and othe tools at a cost of $820 what is the contribution margin contribution rate

1.  Contribution margin (Per unit) = $80

2. Contribution rate (Ratio) = 66.67%

Explanation:

Requirement 1:

Given, Price (Painting) = $120

Variable costs (Brush and Paint) = $40

We know, contribution margin refers to the differences between selling price and variable costs. It is one of the most significant parts of management accounting to make a productive decision.

Contribution margin (Per unit) = Selling price - Variable Cost

Contribution margin (Per unit) = $120 - $40

Contribution margin (Per unit) = $80

Requirement 2:

Contribution margin ratio is the percentage of sales revenue or selling price remaining after deducting all the variable expenses or costs. The rate is calculated by dividing the contribution margin by sales.

Contribution Margin Rate (Ratio) = (Contribution Margin / Selling Price)*100

C.M Rate (Ratio) = ($80 / $120)*100

C.M Rate (Ratio) = 66.67%

The contribution margin analysis is an important piece of the break-even analysis.

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