Question

Marigold corp. has two divisions; sporting goods and sports gear. the sales mix is 65% for sporting goods and 35% for sports gear. marigold incurs $7030000 in fixed costs. the contribution margin ratio for sporting goods is 30%, while for sports gear it is 50%. what will be the total contribution margin at the break-even point?

Answer 1

Sporting Goods - CM 30% x 65% = 19.5% Sports Gear - CM 50% x 35% = 17.5% Total Fields Corp - Weighted Avg CM = 37% FC 2,220,000 / Avg CM 37% = 6,000,000 Break Even sales Sporting Goods Sales @ 65% = 3,900,000 x 30% = 1,170,000 CM Sports Gear Sales @ 35% = 2,100,000 x 50% = 1,050,000 CM Total Sales 6,000,000. Total CM 2,220,000 Total FC 2,220,000