Storytime Park competes with Splash World by providing a variety of rides. Storytime sells tickets at $ 100 per person as a one-day entrance fee. Variable costs are $ 60 per person, and fixed costs are $ 254 comma 000 per month. Compute Storytime Park's contribution margin ratio. Carry your computation to two decimal places. Use the contribution margin ratio approach to determine the sales revenue Storytime Park needs to break even.

contribution margin ratio= 0.4

Break-even point (dollars)= $635,000

Explanation:

Giving the following information:

Storytime sells tickets at $ 100 per person as a one-day entrance fee.

Variable costs are $ 60 per person, and fixed costs are $254,000 per month.

To calculate the contribution margin ratio, we need to use the following formula:

contribution margin ratio= contribution margin/selling price

contribution margin ratio= (100 - 60)/100

contribution margin ratio= 0.4

To calculate the sales required to break even, we need to use the following formula:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 254,000/0.4

Break-even point (dollars)= $635,000

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