The Total Contribution Cost Ratio
Racquets  £225
Producing  6000 units
Labour  27000 hours
Materials  £44 X 6000 = £264,000
Labour  £12 X (4.5 hours x 6000) = £324,000
Variable overheads production – 10 x 4.5 = 45 x 6000 = £270,000
Total Expenses  £858,000 + 161,000 + 126,000 = 1,145,000
BEP – £225 x 6000 = 1,350,000
£1,350,000 – £858,000 = 492,000 divides by 6000 = 82 contribution per unit
£161,000 + £126,000 = £287,000 Fixed costs
£287,000 divides by 82 = 3500 units to hit BEP
B. 3500 units X 225 selling price = £787,500
C. The margin of safety is calculated by doing Profit divided by the contribution per unit = Sale Units (No. Of) To find out the percentage you do sale units divided by the No of units sold X 100 = %
£1,350,000  £1, 145000 = £205000 Profit
£205000 divides 6000 = 34.17 Profit per unit
£205000 divide 82 = 2500 units, margin of safety
2500 divide 6000 x 100 = 41.7% margin of safety
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