Question

1. Ed Sunland Corporation has two divisions; Outdoor Sports and Indoor Sports. The sales mix is 70% for Outdoor Sports and 30% for Indoor Sports. Sunland incurs $2214000 in fixed costs. The contribution margin ratio for the Outdoor Sports Division is 40%, while for the Indoor Sports Division it is 50%.

The break-even point in dollars is

$3162857.

$7380000.

$10542857.

$5148837.

2.

Brad Marigold Corporation sells two types of computers; one is designed for audio applications and the other for video applications. Marigold incurs $301800 in fixed costs.
Per-unit data on the two products is presented blow:

Unit data	Audio computer	Video computer
Selling price	$1530	$1740
Variable costs	1050	1170
Contribution margin	$480	$570
Sales mix	75%	25%

The weighted-average contribution margin is

$502.50.

$525.00.

$1147.50.

$405.00.

Answer 1

1) Answer: $5,148,837

Explanation:

	Outdoor Sports	Indoor Sports
Contribution Margin ratio (%)	40	50
Sales mix	70%	30%
Weighted Contribution Margin ratio	40 * 70% = 28%	50 * 30% = 15%

Weighted Average contribution Margin ratio= Sum of Weighted contribution Margin ratio of each product

= 28 + 15

= 43%

Fixed Costs (Given)= $2,214,000

Brekeven Point (In dollars)= Fixed Costs / Weighted average contribution Margin ratio

= 2,214,000 / 43%

= $5,148,837

2) Answer: $502.50

Explanation:

	Audio Computer	Video Computer
Contribution Margin	$480	$570
Sales Mix	75%	25%
Weighted Contribution Margin	480 * 75% = $360	570 * 25% = $142.50

Weighted Average contribution Margin= Sum of Weighted contribution Margin of each product

= 360 + 142.50

= $502.50