Question

Gary mcknight is evaluating a business opportunity to sell grooming kits at dog shows. gary can buy grooming kits at a wholesale cost of $27 per set. he plans to sell them for $60 per set. he estimates fixed costs such as travel costs, booth rental fees, and lodging to be $600 per dog show.

1. what is the contribution margin per grooming kit?

Answer 1

The contribution margin per grooming kit is $33.

Step-by-step explanation:

To calculate the contribution margin per grooming kit, we need to determine the difference between the selling price and the variable cost per grooming kit.

The selling price per grooming kit is $60.

The variable cost per grooming kit is the wholesale cost, which is $27.

Therefore, the contribution margin per grooming kit can be calculated as follows:

Contribution margin per grooming kit = Selling price per grooming kit - Variable cost per grooming kit

Contribution margin per grooming kit = $60 - $27

Contribution margin per grooming kit = $33

Therefore, the contribution margin per grooming kit is $33.