B Explain and defend the selling prices that you established

Direct Direct Manufacturing Period Materials LaborOverhead 5 |Item/Cost 6 Groomer 7 Day care attendant 8 Receptionist 9 Kennel attendant 0 Food and water bowls 11 Fencing for day care area 12 Installation of fencing 13 Dog grooming arm (attaches to table) X 1412 kennels cost 15 Depreciation on kennels 16 Rent 17 | Utilties and insurance 18 Grooming table 19 Grooming tub 48 20 Heating system 21 Depreciation on heating system 22 Clippers 23 Shampoo(Crystal Clear: five-gallon pail) X 24 Cage bank (set of five) 25 Salon Tuff Capri mobile carry cart 26 Towels 27 Scissors (7-inch straight, ear & nose) X 28 Toys (used in day care only) 29 Cleaning products (used throughout) 30 Dryer 31 Rubberized flooring (day care 32 Loan Costs FixedVariable The f see C Company Profile Cost Classification Variable Fixed Contribution Margin Analysis

Solution

Solution: i) For Day Care: Contribution Margin Day care: Selling Price 18 Variable Cost 4.74 Contribution Margin 13.26 No of units sold 22 Total Contribution 291.72 Selling Price 20 Variable Cost 4.74 Contribution Margin 15.26 No of units sold 15 Total Contribution 228.9 Selling Price 25 Variable Cost 4.74 Contribution Margin 20.26 No of units sold 10 Total Contribution 202.6 The Price Range should be $18 per dog per day. ii) For Boarding: Contribution Margin of Boarding: Selling Price 25 Variable Cost 7.36 Contribution Margin 17.64 No of units sold 12 Total Contribution 211.68 Selling Price 28 Variable Cost 7.36 Contribution Margin 20.64 No of units sold 10 Total Contribution 206.4 Selling Price 30 Variable Cost 7.36 Contribution Margin 22.64 No of units sold 7 Total Contribution 158.48 The Price Range should be $25 per dog per day. iii) For Grooming: Contribution Margin of Grooming: Selling Price 25 Variable Cost 9.97 Contribution Margin 15.03 No of units sold 5 Total Contribution 75.15 Selling Price 30 Variable Cost 9.97 Contribution Margin 20.03 No of units sold 4 Total Contribution 80.12 Selling Price 35 Variable Cost 9.97 Contribution Margin 25.03 No of units sold 3 Total Contribution 75.09 The Price Range should be $30 per dog per day. Break Even Analysis: For Grooming: Total Fixed Cost 2367.92 Contribution per unit at $30 20.03 Break even units 118 units (Total Fixed Cost/Contribution per unit) Break even sales ($) 3546.56 For Day Care: Total Fixed Cost 859.39 Contribution per unit at $18 13.26 Break even units 65 units (Total Fixed Cost/Contribution per unit) Break even sales ($) 1166.59 For Boarding: Total Fixed Cost 1378.99 Contribution per unit at $25 17.64 Break even units 78 units (Total Fixed Cost/Contribution per unit) Break even sales ($) 1954.35