Paint and Sip sells admission tickets for a painting class for $40 each. The cost of providing the canvas and supplies is $32 per ticket and the fixed cost of operating the art gallery is $35,000 per month. The company can accommodate 5600 patrons each month. What is the contribution margin per patron?
A)$5.00
B)$0.20
C)$8.00
D)$32.00

Question

Quizplus · Accepted Answer

The contribution margin per patron is calculated as follows:

Contribution Margin = Revenue per Patron – Variable Cost per Patron

Revenue per Patron = $40
Variable Cost per Patron = $32

Contribution Margin = $40 – $32 = $8

Therefore, the contribution margin per patron is $8. This means that for each patron, Paint and Sip earns $8 to contribute towards covering its fixed operating costs.

Based on this information, the best choice would be C, $8.00.

Paint and Sip Sells Admission Tickets for a Painting Class