Question

Dixie Candle Supply makes candles. The sales mix (as a percentage of total dollar sales) of its three product lines is birthday candles 30%, standard tapered candles 55%, and large scented candles 15%. The contribution margin ratio of each candle type is shown below.

Candle Type		Contribution Margin Ratio
Birthday		20%
Standard tapered		30%
Large scented		50%

(a)

Correct answer iconYour answer is correct.

What is the weighted-average contribution margin ratio? (Round answer to 0 decimal places, e.g. 15.)

Weighted-average contribution margin ratio

%

Attempts: 1 of 7 used

(b)

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If the company’s fixed costs are $406,500 per year, what is the dollar amount of each type of candle that must be sold to break even?

		Birthday		Standard tapered		Large scented
Total break-even point		$		$		$

Answer 1

[a]

	Sales Mix	CM Ratio	Weighted Average CM Ratio
Birthday	30%	20%	6.00%
Standard Tapered	55%	30%	16.50%
Large Scented	15%	50%	7.50%
Total Weighted Average contribution margin ratio			30.00%

[b]

Total Break even = $ 406500 / 30% = $ 1,355,000

	Birthday	Standard Tapered	Large Scented
Total Break even point	$406,500	$745,250	$203,250
	$1355000 x 30%	$1355000 x 55%	$1355000 x 15%